What is cash flow?

Cash flow refers to the movement of cash in and out of a business over a specific period of time. It is the amount of cash that is available to a company at any given point, and it is a key indicator of a business's financial health.

Cash inflows can come from various sources, such as sales, investments, and loans, while cash outflows can include expenses, investments, and loan repayments. When the inflows of cash exceed the outflows, the result is a positive cash flow, and when the opposite occurs, the result is a negative cash flow.

Positive cash flow is generally seen as a positive sign for a business, as it indicates that the company has enough cash to cover its expenses and invest in growth opportunities. Negative cash flow, on the other hand, can be a sign of financial trouble, as it means that the company is spending more cash than it is bringing in.

Cash flow is important for businesses of all sizes, as it affects their ability to pay bills, cover expenses, and invest in new opportunities. Cash flow statements are a common financial statement that businesses use to track their cash flow and monitor their financial health over time