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

The term that describes the difference between a company's receipts and its disbursements is cash flow. Cash flow refers to the net amount of cash being transferred into and out of a business during a particular period. It encompasses all cash that comes in (receipts) and all cash that goes out (disbursements), which includes operating activities, financing activities, and investing activities.

This measure is crucial for understanding a company's liquidity and its ability to meet short-term obligations. A positive cash flow indicates that a company is generating more cash than it is spending, while a negative cash flow suggests the opposite, potentially signalling financial trouble.

In contrast, net income represents the company's profit after all expenses, taxes, and costs are deducted from total revenue. Gross profit refers specifically to revenue minus the cost of goods sold, while operating income accounts for earnings before interest and taxes, focusing on the core operations of the business. Each of these terms is related to profitability but does not encapsulate the overall liquidity situation that cash flow provides.