The last two years have been challenging for our industry in many ways but there have also been a lot of positives. Whilst the day to day has been difficult, the growth pharmacies have seen has been significant.
As we close out the financial year and we assist clients in estimating their tax position. As a result of the growth they have experienced, one of the most common questions we get from clients is, why doesn’t my cash position reflect these profits I now have to pay tax on?
When small business owners receive their monthly financial statements, their eyes quickly focus on the bottom line of the income statement.
If profit meets their expectations for the period, they move onto the balance sheet to the cash balance, where they may be surprised to see that the cash balance didn’t grow as much as they thought it should.
To understand where your cash has gone, you must first understand the relationship between profit and cash flow, and how each is calculated.
