Why

Investor: An investor wants to make sure the corporation has enough cash flow
to pay an adequate return on investment. In other words, can the investor
anticipate getting a cash dividend each year?

Creditor: The creditor also has a vested interest in making sure the company
has sound cash management. After all, in addition to the interest expense the

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debtor pays for the use of the loan, the creditor wants to make sure it also gets
paid back the principal portion of the loan. It’s never a good sign if a business
is paying back debt by assuming more debt or issuing more equity.
Profit is the difference between income and expenses. Income is calculated at
the time the sale is booked, rather than when full payment is received. Likewise,
expenses are calculated at the time the purchase is made, rather than when
you pay the bill.

Cash flow is the difference between inflows (actual incoming cash) and
outflows (actual outgoing cash). Income is not counted until payment is received
and expenses are not calculated until payment is made. Cash flow also includes
infusions of working capital from investors or debt financing.