Tuesday afternoon. Two Q4 results land in the same hour. Same Net Profit on both screens.
Two midcap industrials. Both print Rs 245 cr Net Profit. Both press releases say "record quarter". Open the cash flow page. One company collected Rs 220 cr in real bank deposits. The other collected Rs 38 cr. Same income statement. Two completely different businesses.
Company A . the boring one
0.90
CFO / Net Profit
Net Profit Rs 245 cr. Cash from operations Rs 220 cr. Working capital steady. Receivables in line with sales. Earnings showed up in the bank.
VS
Company B . the exciting one
0.16
CFO / Net Profit
Net Profit Rs 245 cr. Cash from operations Rs 38 cr. Receivables blew out 92 days. Inventory pile up. The profit is on the slide. The cash is not.
Net Profit is what management chose to recognise. Cash from operations is what arrived in the bank. The gap between them is the only line item that does not negotiate.