StockDecksProfit vs cash flow (accruals)
Whether a company’s reported profit is backed by real cash coming in.
How it’s calculated
(Net income − cash flow from operations) ÷ total assets, from the latest annual accounts. Accountants call the gap “accruals”.
How to read it
Profit is an accounting figure; cash flow is what actually arrived. When profit runs well ahead of cash for a long time, earnings can prove less durable than they look.
Fast-growing companies often build up stock and money owed by customers, which holds cash back for genuine reasons.
How StockDecks scores it
Scored only for profitable companies. Cash flow at or above profit scores positively; profit running ahead of cash by about 3% of assets scores around −40, and by 8% scores about −85, falling towards −100 beyond that.
It is one of the measures behind the Profitability rating. Every measure, benchmark and weighting is set out on the methodology page.