The handful of numbers that tell you how the business is really doing, each decoded into plain English with the question it forces and the move it points to. Year One · a worked example.
You booked $17,200 of profit, yet operations consumed $2,800 of cash this period.
A business can post a healthy profit and still run out of cash. The gap between the two is explained by just a few moving parts.
The money actually in the bank right now. Not profit, not what you are owed: cash you can spend today.
Is this enough to cover what is due before more comes in?
Map the next eight weeks of money in and money out so a shortfall never surprises you.
You earned $17,200 on paper this period, yet running the business actually drained $2,800 of real cash. That $20,000 gap is profit that never reached the bank: it is tied up in inventory you have already paid for and in sales you have booked but not yet collected. Booked profit is only an estimate; money in the bank is what pays the bills.
Follow the cashMap the next eight weeks of money in and money out so a shortfall never surprises you.
If this is negative while profit is positive, hunt the gap in receivables and inventory.
Trace whether profit is turning into cash; profit you cannot bank is a story, not a result.
Falling margin means price or cost is drifting; find which one before it reaches the bottom line.
Under one is a liquidity squeeze; free up cash or restructure short-term debt before it bites.
Negative here period after period means the business consumes more cash than it makes.
Rising receivables drain cash; tighten terms and chase the oldest invoices first.
A handful of causes, each with a standard and one accountable person, actually run the business. Name them once and this becomes the weekly ritual that keeps them honest.