Cash flow is
basically the movement of money in and out of a business. From there are is
cash inflow and cash outflow. Cash inflow is the movement of money into a
business. Cash outflow is the movement of money out of a business. The
difference between cash inflow and outflow in a period of time is called is
known as net cash flow.
Cash flow is important because then the business can see whether or not they are making money. If there is more cash inflow then cash outflow, that is a healthy sign of the business and shows that it is doing good. Having more cash inflow then out flow means that the business can pay their employees and creditors.
Operational cash flow: This is when money is received or spent by the actions of the business. An example can be when a business sells something, they giver some of their money to their employees.
Investiment cash flow: This is when money is received or spent my invesment actions
Financing cash flow: This is when money is received by debt or is given due to debt payments.
It is important for businesses to keep an eye out for their cash flow, in case they have no cash flow and can not pay anything, which will make them end up having a cash flow crunch. This is why businesses would need to have some reserve money in case they any unfortunate events which will cause them loose money.
Cash flow is important because then the business can see whether or not they are making money. If there is more cash inflow then cash outflow, that is a healthy sign of the business and shows that it is doing good. Having more cash inflow then out flow means that the business can pay their employees and creditors.
Operational cash flow: This is when money is received or spent by the actions of the business. An example can be when a business sells something, they giver some of their money to their employees.
Investiment cash flow: This is when money is received or spent my invesment actions
Financing cash flow: This is when money is received by debt or is given due to debt payments.
It is important for businesses to keep an eye out for their cash flow, in case they have no cash flow and can not pay anything, which will make them end up having a cash flow crunch. This is why businesses would need to have some reserve money in case they any unfortunate events which will cause them loose money.
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