Why Cash Flow Matters More Than Profit

Many new investors focus on profit, but seasoned analysts know that cash flow tells the real story. A company can report strong earnings while struggling to pay its bills if cash inflows are weak. Operating cash flow reveals whether a business can sustain itself without external financing. Positive cash flow supports expansion, debt repayment, and shareholder returns. In uncertain markets, firms with strong liquidity often outperform peers. Evaluating cash flow statements helps investors avoid companies that look profitable on paper but lack financial resilience.

Source: https://www.sec.gov