Cash-flow

Sayings:

  • Cash is king
  • Profit is vanity and cash-flow is sanity

Definition:

Cashflow is a management tool to help avoid liquidity problems. It tracks inflows of money and the inevitable outflows.

Flavours:

Cash-flow statements differ – each one suited to a particular business needs

  • Simple cash-flow statement (or cash budget): arranges items into two categories – inflows & outflows
  • Operating cash-flow statement: Limits the analysis to Operational items and excludes financing
  • Financing cash-flows: Includes cash raised by new debt or equity capital, as well as expenses incurred for repaying debt or paying dividends on stock
  • Statement of cash-flow: An external statement that depicts the period to period changes in balance sheet items.

 

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