• Profit: It's like getting a good grade on your test! It's the difference between your total marks (revenue) and how many mistakes you made (costs).

  • 📌 Real-world example: You sold 10 chocolate bars for $2 each (Total Revenue = $20). They cost you $1 each to buy (Total Cost = $10). Your profit? $10!

• Cash Flow: Think of it like water in a bottle. It's about the water (money) coming in and going out. But here's the catch – only the water you can see and touch, which means only the cash transactions.

  • 📌 Real-world example: You might sell a video game to a friend who promises to pay you next week. That's great for profit, but there's no cash (water) in your bottle yet!

Cash-Flow Forecast: It's a bit like predicting tomorrow's weather. Instead of sun and rain, you're predicting cash coming in and out.

• 📌 Real-world example: Imagine planning a picnic. You’d check the weather, right? Similarly, a business checks its cash-flow forecast to plan ahead.

Things in the Forecast

• Opening cash balance: Cash you start with.
• Cash inflows: Money flowing in! Like when you get your allowance.
  • Examples: Selling your old bike, getting money from someone who owed you, borrowing from the "Bank of Parents."
• Cash outflows: Money flowing out! Like when you buy a cool new gadget.
  • Examples: Spending on snacks, paying your mobile bill, giving a gift.
• Net cash flows: The difference between inflow and outflow.
• Closing cash balance: The cash you end up with.