Final answer:
Cash flow is the correct option, as it reflects the net amount of cash being transferred in and out during a period, calculated using initial cash, cash receipts, and cash disbursements.
Step-by-step explanation:
The formula given in the question is describing a concept known as cash flow, which is calculated by subtracting cash disbursements from cash receipts and adding them to initial cash on hand. This is a key metric used in financial management to assess the amount of cash that is entering and leaving a business over a certain period. This should not be confused with profit, which is the total revenue minus the total expenses, including both cash and non-cash items, or gross profit, which is the revenue minus the cost of goods sold.
Finally, revenue refers to the total income generated from the sale of goods or services before any costs or expenses are deducted. Cash flow is an important financial metric for businesses as it helps to assess their ability to meet short-term financial obligations, invest in new opportunities, and generate profits.