The difference between a company's receipts and its disbursements is known as what?

The difference between a company's receipts and its disbursements is referred to as cash flow. Cash flow represents the net amount of cash being transferred into and out of a business during a specific period. It provides insight into the liquidity of the company—reflecting whether the company has enough cash to meet its obligations and invest in its operations.

Understanding cash flow is crucial for businesses, as it helps in assessing financial health and operational efficiency. Positive cash flow indicates that a company is generating more cash than it is spending, which is essential for growth, paying debts, and reinvestment in the business.

In contrast, net profit pertains to the earnings of a company after all expenses have been deducted from revenue but does not specifically focus on cash movements. Gross income refers to total revenue before any deductions and does not account for costs incurred. Operating expenses represent the ongoing costs for running the business but do not capture the complete picture of cash inflows and outflows. Thus, cash flow uniquely encapsulates the transactional dynamic between receipts and disbursements.