Chapter 13Why Profit Is Not Cash

Bridge the gap between reported profit and available cash by identifying timing, working-capital, investment, financing and owner movements.

By Manish Gupta, CA · eHMS Press · Updated Aug 28, 2026

Questions this chapter helps answer

Why can a hotel report operating profit while its bank balance falls?
How do receivables, OTA settlements, deposits, inventory, supplier timing, capex, debt principal, tax, and owner drawings create a profit-to-cash gap?
How should an owner reconcile profit to cash without confusing the P&L with the bank account?

Key concepts

profit versus cash
profit-to-cash bridge
receivables
settlement timing
deposits
capex
debt principal
owner drawings
cash timing

Bridge the gap between reported profit and available cash by identifying timing, working-capital, investment, financing and owner movements.

Chapter-end learning

Apply, check, and remember

Apply it to your situation

Connect the chapter to a real hotel decision

As you answer, think about where this issue appears in your own property, team, report, meeting, or control process. Work through one item at a time, check the result, and then continue.

Knowledge check

Question 1 of 3

0 checked

Which statement best reflects the central rule of Chapter 13?

What this tests: Recognise the chapter's central management principle.

Profit and cash move on different clocks; reconcile the difference through working capital, timing, investment, financing and owner movements.Judge the issue from one headline number and act immediately.Add as much reporting detail as possible before deciding what matters.Treat the accounting output as sufficient without testing the operating context.

Show hint

Use the owner-first rule in this chapter.

1 / 3

Memory practice

Flashcard 1 of 4

Profit-to-cash bridge

Reveal the answer, decide how confident you are, and then move to the next card.

Continue the discussion

Share how this applies in practice

Profit and bank cash answer different questions.

The hotel reports $21,690 operating profit but the bank balance fell. Which movements should the owner test before assuming the P&L is wrong?

Reconcile receivables, OTA or card settlements, deposits, inventory, payables, capex, tax, debt principal, owner drawings and other timing items.

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