What are the key differences in cash flow analyses performed by investor-owned businesses and not-for-profit businesses? Provide examples

To understand the key differences between cash flow analyses for investor-owned businesses and not-for-profit businesses, it is important to remember that investor-owned businesses are under pressure to create a good return on investment while the goal for a not-for-profit business is the achieve a stated objective without an emphasis on turning a profit.

However, having stated the differences between the two, it is also important to keep in mind that both types of businesses will still need to generate positive cash flow to remain in business to pay for rent, utilities, salaries, wages, and other expenses. In addition, cash flow is needed to make debt payments. In this regard, both businesses will still need positive cash flow to meet their needs.

For example, an investor-owned business would be Apple or Microsoft. These two large tech companies need to continue to generate cash to pay dividends to shareholders and to make debt payments. An example of a not-for-profit business would be the American Red Cross. This organization does not have an emphasis on shareholder return, but the Red Cross still needs positive cash flow to better serve the individuals that are in need of service.