What is cash flow?
Cash flow is usually understood to be the total amount of cash that is generated and received by a company, along with the amount of cash that is used for expenses of the organization. Generally, tracking cash flow means the immediate recording of transactions in a cash journal. Monitoring cash flow is considered essential to having an accurate picture of the financial stability of the business, and often can yield information that can be used to improve the economic condition of the company. A cash flow can be associated with the general operation of the company or with a particular component or project of the corporation. For example, when one department maintains a discretionary fund of petty cash, a record of cash flow will be maintained. The idea behind recording receipts to petty cash as well as expenditures that are paid out will help the business to recognize when an incidental expense becomes a recurring one, and should be added as a line item to the budget. In the case of a s
Business is all about trade, the exchange of value between two or more parties, and cash is the asset needed for participation in the economic system (see What Is Money?). For this reason – while some industries are more cash intensive than others – no business can survive in the long run without generating positive cash flow per share for its shareholders. To have a positive cash flow, the company’s long-term cash inflows need to exceed its long-term cash outflows. An outflow of cash occurs when a company transfers funds to another party (either physically or electronically). Such a transfer could be made to pay for employees, suppliers and creditors, or to purchase long-term assets and investments, or even pay for legal expenses and lawsuit settlements. It is important to note that legal transfers of value through debt – a purchase made on credit – is not recorded as a cash outflow until the money actually leaves the company’s hands. A cash inflow is of course the exact opposite; it
Your cash flow is simply the money going into your pocket and out again. It is matching up your income with your expenses. Sounds simple doesn’t it? It really is, but very few people take the time to keep track of what actually comes in and goes out each month. LowerMyBills.com Credit Card Debt $ Select One 0 1 – 2,499 2,500 – 4,999 5,000 – 7,499 7,500 – 9,999 10,000 – 12,499 12,500 – 14,999 15,000 – 19,999 20,000 – 29,999 30,000 – 39,999 40,000 – 49,999 50000+ Other Unsecured Debt $ Select One 0 1 – 2,499 2,500 – 4,999 5,000 – 7,499 7,500 – 9,999 10,000 – 12,499 12,500 – 14,999 15,000 – 19,999 20,000 – 29,999 30,000 – 39,999 40,000 – 49,999 50000+ Number of Creditors Select One 2 3 4+ Status of Bill Payments Select One Up to Date About to Fall Behind 1 Month Behind 2 or More Months Behind I want to Select One Eliminate My Debt Consolidate My Debt Seek Advice Own a Home? Yes No The second worksheet with this lesson is called “Income and Expenses.” For the most accurate look at your bud
