Warning: Profits are not the same as cash flows
Abstract: Many dealer-owners mistakenly equate profits with cash flow. But there are many reasons these numbers might differ. This article discusses how working capital fluctuates and notes that profits exclude capital expenditures and debt. So, it’s to be expected that some growing, profitable dealerships will experience cash shortages. And some mature “cash cows” will have ample cash on hand, despite lackluster sales.