foxex: What is 'Cash Flow'?

Thursday, January 2, 2020

What is 'Cash Flow'?

Term of the Day | Words to Know

Cash flow is the net amount of cash and cash-equivalents being transferred into and out of a business. At the most fundamental level, a company's ability to create value for shareholders is determined by its ability to generate positive cash flows, or more specifically, maximize long-term free cash flow.

Related to "Cash Flow"

Analyze Cash Flow the Easy Way

Learn the key components of the cash flow statement, how to analyze and interpret changes in cash, and what improved free cash flow means to shareholders.

Corporate Cash Flow: Understanding the Essentials

Tune out the accounting noise. Learn how to read a cash flow statement and determine whether a company is generating enough to sustain itself.

How Depreciation Affects Cash Flow

Depreciation is a non-cash accounting expense that doesn't involve cash flow, but it is a factor that can impact all areas of a company's financial performance.

Related Definitions

Cash Flow Statement

A cash flow statement is a financial statement that provides aggregate data regarding all cash inflows and outflows a company receives.

Liquidity

Liquidity refers to the speed with which an asset or security can be bought or sold in the market, without affecting its price—the ease of converting it to ready money, or cash. Cash is considered the most liquid of assets.

Free Cash Flow

Free cash flow represents cash a company can generate after accounting for capital expenditures needed to maintain or maximize its asset base.

Debt-Service Coverage Ratio

In corporate finance, the debt-service coverage ratio (DSCR) is a measurement of the cash flow available to pay current debt obligations.