noob question on cash flow

hi team - appreciate the answers in advance. this is probably a very easy question. 

 

  1. assuming no revenues, if operating expenses are $1M... shouldn't cash from operations be -$1m?

 

  1. if you have no revenues, $1M in cogs, $1M in opex, would cash from operations be -$2M?

 

  1. should operating income / profit always tie to cash from operations in the cash flow statement? should these be the same #?

Comments (2)

 
Most Helpful
Feb 22, 2021 - 4:41pm

No, not at all. Expenses are different from cash outflows. For example, if you pay $100 for inventory, but have not sold it yet, that will not show up anywhere on an income statement because we have not recognized the revenue associated with that purchase, but we still would have obviously lost cash. Similarly, if someone gives Netflix $60 for their years' subscription, but they haven't used even 1 month yet, then we of course have $60 of cash inflow, but we cannot record any of that as revenue because we have not yet provided the service. I recommend you spend a few hours Googling and reading about Accrual Accounting.

Array

  • 3
Start Discussion

Popular Content See all

This Fucking Sucks
+50OFFby Prospective Monkey in Investment Banking - Mergers and Acquisitions">Prospect in IB-M&A
Why would any associate+ banker choose a BB over EB?
+39IBby Intern in Investment Banking - Mergers and Acquisitions">Intern in IB-M&A
You Did it Citi
+32OFFby 2nd Year Analyst in Investment Banking - Industry/Coverage">Analyst 2 in IB - Ind
Share a day that looked like a Suits/Billions episode
+31IBby Intern in Investment Banking - Generalist">Intern in IB - Gen
PE isn’t the best way to get into b-school
+28BSCHby 2nd Year Associate in Private Equity - LBOs">Associate 2 in PE - LBOs
Evercore Target Schools?
+22BSCHby Prospective Monkey in Investment Banking - Mergers and Acquisitions">Prospect in IB-M&A
What's Wrong with Warburg Industrial & Business Services?
+17PEby 1st Year Analyst in Investment Banking - Mergers and Acquisitions">Analyst 1 in IB-M&A

Total Avg Compensation

February 2021 Private Equity

  • Principal (7) $694
  • Director/MD (15) $627
  • Vice President (61) $374
  • 3rd+ Year Associate (63) $267
  • 2nd Year Associate (119) $246
  • 1st Year Associate (256) $223
  • 3rd+ Year Analyst (24) $164
  • 2nd Year Analyst (58) $137
  • 1st Year Analyst (168) $119
  • Intern/Summer Associate (18) $71
  • Intern/Summer Analyst (182) $59

Leaderboard See all

1
LonLonMilk's picture
LonLonMilk
98.5
2
Jamoldo's picture
Jamoldo
98.4
3
Secyh62's picture
Secyh62
98.3
4
CompBanker's picture
CompBanker
97.9
5
redever's picture
redever
97.8
6
frgna's picture
frgna
97.6
7
Addinator's picture
Addinator
97.6
8
bolo up's picture
bolo up
97.5
9
NuckFuts's picture
NuckFuts
97.5
10
Edifice's picture
Edifice
97.5