cash flow

(noun)

The sum of cash revenues and expenditures over a period of time.

Related Terms

Examples of cash flow in the following topics:

  • Free Cash Flow

    • Free cash flow (FCF) is cash flow available for distribution among all the securities holders of an organization.
    • In corporate finance, free cash flow (FCF) is cash flow available for distribution among all the security holders of an organization.
    • There are four different methods for calculating free cash flows.
    • Free cash flows = Cash flows from operations - Capital Expenditure ""
    • Even profitable businesses may have negative cash flows.

  • Interpreting Overall Cash Flow

    • In financial accounting, a cash flow statement (also known as statement of cash flows or funds flow statement) is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.
    • A positive cash flow means that more cash is coming into the company than going out, and a negative cash flow means the opposite.
    • An analyst looking at the cash flow statement will first care about whether the company has a net positive cash flow.
    • The company may have a positive cash flow from operations, but a negative cash flow from investing and financing.
    • Company B has a higher yearly cash flow.

  • Defining the Statement of Cash Flows

    • A statement of cash flows is a financial statement showing how changes in balance sheet accounts and income affect cash & cash equivalents.
    • In financial accounting, a cash flow statement, also known as statement of cash flows or funds flow statement, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.
    • Essentially, the cash flow statement is concerned with the flow of cash in and out of the business.
    • International Accounting Standard 7 (IAS 7), is the International Accounting Standard that deals with cash flow statements.
    • Indicate the purpose of the statement of cash flows and what items affect the balance reported on the statement

  • Cash Flow from Operations

    • The operating cash flows refers to all cash flows that have to do with the actual operations of the business, such as selling products.
    • The operating cash flows component of the cash flow statement refers to all cash flows that have to do with the actual operations of the business.
    • Cash flows from operating activities can be calculated and disclosed on the cash flow statement using the direct or indirect method.
    • It is only when the company collects cash from customers that it has a cash flow.
    • Operating cash flows, like financing and investing cash flows, are only accrued when cash actually changes hands, not when the deal is made.

  • Cash Flow from Financing

    • One of the three main components of the cash flow statement is cash flow from financing.
    • Receiving the money is a positive cash flow because cash is flowing into the company, while each individual payment is a negative cash flow.
    • Extending credit is an investing activity, so all cash flows related to that loan fall under cash flows from investing activities, not financing activities.
    • However, because no cash changes hands, the discount does not appear on the cash flow statement.
    • The cash from issuing stocks in a market such as the New York Stock Exchange is positive financing cash flow.

  • Cash Flow Factors

    • Cash flow factors are the operational, financial, or investment activities which cause cash to enter or leave the organization.
    • A business's Statement of Cash Flows illustrates it's calculated net cash flow.
    • The total net cash flow is composed of several factors:
    • Operational cash flows: Cash received or expended as a result of the company's internal business activities.
    • Cash flow factors can be used for calculating parameters, such as:

  • Components of the Statement of Cash Flows

    • The cash flow statement has 3 parts: operating, investing, and financing activities.
    • In financial accounting, a cash flow statement, also known as statement of cash flows or funds flow statement, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.
    • Essentially, the cash flow statement is concerned with the flow of cash in and out of the business.
    • Statement of cash flows includes cash flows from operating, financing and investing activities.
    • Recognize how operating, investing and financing activities influence the statement of cash flows

  • Limitations of the Statement of Cash Flows

    • In short, we can summarize what cash flows are used for as:
    • The simplest drawback to a cash flow statement is the fact that cash flows can (but not always) omit certain types of non-cash transactions.
    • As the name implies, the statement of cash flows is focused exclusively on tangible changes in cash and cash equivalents.
    • Under IAS 7, cash flow statement must include changes in both cash and cash equivalents.
    • Under GAAP, non-cash activities may be disclosed in a footnote or within the cash flow statement itself.

  • Cash Flow from Investing

    • Cash flow from investing results from activities related to the purchase or sale of assets or investments made by the company.
    • One of the components of the cash flow statement is the cash flow from investing .
    • However, this cash flow is not representative of an investing activity on the part of the company.
    • It is important to remember that, as with all cash flows, an investing activity only appears on the cash flow statement if there is an immediate exchange of cash.
    • Distinguish investing activities that affect a company's cash flow statement from the business's other transactions

  • Defining the Cash Flow Cycle

    • The cash flow cycle measures how long it takes for a firm to recover cash that it invests in ongoing operations.
    • Cash flow cycle also is called "cash conversion cycle" (CCC).
    • The cash conversion cycle refers to the time frame between a firm's cash disbursement and cash collection.
    • However, the CCC cannot be directly observed in cash flows, because these are also influenced by investment and financing activities; it must be derived from statement of financial position or balance sheet data associated with the firm's operations.
    • However, for a firm that buys and sells on account, Increases and decreases in inventory do not occasion cash flows but accounting vehicles (receivables and payables, respectively); increases and decreases in cash will remove these accounting vehicles (receivables and payables, respectively) from the books.