Cash Flow
Table of Contents:
Definition of Cash Flow
Cash flow defines as the movement of money into and out of a business over a specific period. It serves as a critical financial metric that tracks the liquidity and financial health of an organization.
Positive cash flow occurs when a business generates more money from its operations than it spends on expenses, investments, and debts during a given period. Conversely, negative cash flow indicates that a company is spending more than it's earning.
Cash flow analysis helps businesses manage their operations, make investment decisions, meet financial obligations, and plan for future growth. It is a key indicator of a company's ability to sustain and thrive in the long run.
What is Cash Flow?
Cash flow signifies the movement of money in and out of a business throughout a specific timeframe. It serves as a crucial financial barometer, offering insights into an organization's monetary liquidity and financial well-being.
A favorable cash flow situation arises when a business generates more funds from its activities than it expends on various costs, investments, and debts during the specified period. Conversely, an adverse cash flow scenario implies that a company is spending beyond its income.
Cash flow analysis is instrumental in helping companies efficiently manage their operations, make sound investment choices, fulfill financial commitments, and strategize for future expansion. It fundamentally reflects a company's capacity to endure and thrive over time.
