Cash Flow Meaning and Definition
Cash Flow
Pronunciation
/ˈkæʃ ˈfloʊ/
Part of Speech
Noun
Definition
Cash flow refers to the movement of money into or out of a business, project, or financial account. It is the net change in a company’s liquid assets over a specific period, and is an important metric for financial management and investment decisions.
Examples
- The company struggled to maintain a positive cash flow due to low sales.
- The entrepreneur used cash flow analysis to evaluate the profitability of her new venture.
Synonyms
- Financial flow
- Liquidity
Antonyms
- Deficit
- Drought
Additional Information
Cash flow is a vital component of financial management, as it can impact a company’s ability to pay its bills, invest in growth opportunities, and respond to changes in the market. There are several methods to analyze cash flow, including the direct and indirect methods. The direct method involves calculating cash flows from individual transactions, such as sales and purchases, while the indirect method involves adjusting a company’s net income to reflect its cash flows.
Cash flow can be affected by various factors, including changes in accounts receivable and payable, inventory levels, and capital expenditures. It is essential for businesses to monitor their cash flow regularly to make informed decisions and maintain financial stability.
Etymology
The term “cash flow” originated in the 1960s, derived from the idea of money flowing in and out of a business.
Usage Notes
Cash flow is typically used in a business or financial context, but it can also be applied to personal finance and investments. When using the term, it’s essential to provide context to avoid confusion.
Cultural References
Cash flow has been referenced in popular culture, such as in the book “The Intelligent Investor” by Benjamin Graham and in the TV show “Shark Tank.”
Idiomatic Expressions or Phrases
Common idioms related to cash flow include “positive cash flow” and “negative cash flow.”
Related Words or Phrases
Words or phrases closely related to cash flow include “profit,” “loss,” “revenue,” and “expenses.”
Collocations
Common collocations with cash flow include “cash flow statement,” “cash flow analysis,” and “positive cash flow.”
Frequency of Use
Cash flow is a commonly used term in business and finance, especially in the context of investments, financial planning, and business management.
Common Misspellings
Common misspellings for cash flow include “Cash FLoW” and “Cas Flow.”