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Revenue, profit and cash

For learning only. Cityfort is not a registered investment adviser or broker-dealer and does not recommend buying or selling any security. Prices shown are dated and may be out of date.

What to do

  1. The exit ticket is on page 2 of your worksheet. Your teacher will tell you when to answer it.

Three words you need

Profit and cash can be different. A company records a cost when it uses something up, not always when it pays for it.

Warm-up: the sneaker reseller (made-up numbers)

Jordan resells sneakers. In May, Jordan pays $1,000 for 10 pairs. In June, Jordan sells all 10 pairs for $1,400.

  • May: Cash in or out: −$1,000; Profit recorded: $0
  • June: Cash in or out: +$1,400; Profit recorded: $400
  • In which month did Jordan "make money"?
  • In which month did Jordan's cash go down?

Three real cases

All numbers are in US dollars, for the full fiscal year. Both companies' years end on Dec 31.

Source: each company's Form 10-K, as shown on its Cityfort page. Checked Nov 7, 2026.

  • A. Netflix, FY2021: Revenue: $29,697.8 million; Net income (profit): $5,116.2 million; Cash from operations: $392.6 million
  • B. Netflix, FY2025: Revenue: $45,183.0 million; Net income (profit): $10,981.2 million; Cash from operations: $10,149.3 million
  • C. Chipotle, FY2025: Revenue: $11,925.6 million; Net income (profit): $1,535.8 million; Cash from operations: $2,113.9 million

Clues from the companies' own reports

  • Netflix pays for many shows before they come out. It records the cost of each show over up to ten years.
  • Netflix's FY2021 10-K says payment terms for certain content licenses and productions "require more upfront cash payments relative to the amortization expense."
  • Amortization means spreading a cost over several years.
  • Chipotle spent on average about $1.5 million to build each new restaurant in 2025. It records that cost a little each year, as depreciation.
  • In FY2025, Chipotle recorded $361.4 million of depreciation and amortization. That cost lowered profit but used no cash that year.

Questions

  1. For each case, which is bigger: net income or cash from operations?
  2. Same company, four years apart: why did the gap between Netflix's profit and cash nearly disappear?
  3. How can a restaurant company bring in more cash than its profit?

Word bank

Revenue:
Money a company earns from customers in a year.
Net income (profit):
What is left of revenue after all the costs, interest and taxes recorded for that year.
Cash from operations:
Cash that came in from running the business, minus cash that went out.

Data from Netflix's FY2025 Form 10-K, filed Jan 23, 2026; Netflix's FY2021 Form 10-K, filed Jan 27, 2022; and Chipotle's FY2025 Form 10-K, filed Feb 4, 2026. Checked Nov 7, 2026. Optional further reading: the lesson page.