Distinguish profit from cash by considering credit sales, trade credit, owner finance, non-cash items, timing and the liquidity of a business.
Extract A Żabka Polska Żabka is a chain of shops in Poland. The business started in 1998 and now has over 8,000 shops in Poland. Most of these shops are run by people who have paid for one of the franchising opportunities offered by Żabka. As well as selling a variety of groceries, the shops sell hot drinks and snacks that include hot soup and hot sandwiches. It is also possible to send parcels from the shops, saving customers time from having to visit post offices. More than 15 million Polish consumers live within 500 metres of the nearest Żabka. It prides itself on being close to its customers and understanding their needs. Żabka shops are developed with customers in mind. The shops are not only in the centre of large cities but in smaller towns too. Żabka's head office is in Poznań, where the six members of the Management Board are based. They make the decisions for Żabka, such as whether to use zero based budgeting for marketing the stores.
Extract B Sales revenue data in Polish złoty (zł) from a Żabka shop January-March 2022
Extract C Polish Government announces plans for lower income tax In 2022, the Polish Government announced plans to reduce income tax (the tax paid on personal income from paid and self-employment). It has presented the plans as part of its measures to protect Poles from the economic consequences of higher costs of living.
Analyse two possible reasons why the cash a Żabka shop holds may differ from its profit.