Cash Flow
Cash Flow (Definition)
Cash flow refers to the net amount of cash and cash equivalents moving into and out of a business.
Key aspects of cash flow include:
- Measures a companys liquidity and ability to meet short-term obligations
- Can be positive (more cash coming in than going out) or negative
- Divided into operating, investing, and financing activities
- Crucial for day-to-day operations and long-term business sustainability
- Used to assess a companys financial health and investment potential
- Can differ from profit due to non-cash expenses and timing of transactions
- Effective cash flow management is essential for business growth and survival
Understanding and managing cash flow is critical for maintaining financial stability and making informed business decisions.