Is financial condition more closely related to net income or to cash flow?

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Is financial condition more closely related to net income or to cash flow?

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Answer :

Financil condition is more related to Cashflow of the compnany .

Explanation to the above answer

Net income means revenue minus incurred expenses. Income statement shows the profitability of the company and higher the net income does not mean higher liquidity

As against to these Total cash flow is the operative cash flow plus the net working capital of the company. operative cash flow reports inflows and outflows as a result of regular operating activities. Cash flow and net income statements are different in most cases, because there is a time gap between documented sales and actual payments
High operating Cash flow show high fund flow in to the company but high net income does not mean high fund flow in to the company

So in the brief we could say that financial condition more closely related to to cash flow

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