Cash flow

Cash flow refers to the amount of cash coming in and going out of a business or individual over a specific period of time. It represents the inflow and outflow of cash during a given time period, such as a month or a year. Positive cash flow occurs when there is more cash coming in than going out, while negative cash flow occurs when there is more cash going out than coming in.

Cash flow is an important measure of financial health for businesses and individuals. It allows them to assess their ability to pay bills and expenses, as well as to invest in new opportunities. A positive cash flow indicates that a business or individual has enough cash to cover expenses and invest in growth, while a negative cash flow can lead to financial difficulties, such as late payments or debt.

To manage cash flow, businesses and individuals typically create a cash flow statement that outlines all of their cash inflows and outflows for a given period. This statement allows them to identify areas where they can reduce expenses, increase revenue, or adjust payment schedules to improve their cash flow.