A simplified example
A business records credit sales of OMR 10,000 and related costs of OMR 7,000. It may show a margin of OMR 3,000 before other items, but if customers have not paid, cash for suppliers and payroll may be short. This illustration is not a complete financial statement.
Separate three cash-flow categories
Operating cash flows relate to ordinary activities such as customer collections and supplier and employee payments. Investing commonly covers long-term asset purchases or disposals. Financing relates to borrowing and capital changes. IAS 7 presents these categories in the statement of cash flows.
Find the cause of the gap
Review customer ageing, inventory purchased but not sold, supplier payments, prepayments, asset purchases and loan instalments. A cash decline is not automatically an operating loss; identify the flow and when it might reverse.
Turn the report into a decision
Prepare a short-term cash forecast showing opening cash, expected collections, due payments and weekly closing balances. Validate assumptions with records, consider delayed collections or higher costs, then assign actions and dates.
Compare profit with operating cash flow, then examine receivables, inventory, investing and financing. This is general education; actual financial reporting depends on the entity's facts and applicable framework.