Cash flow
Contents
- 1 What Is Cash Flow?
- 2 Understanding Cash Flow
- 3 Key Takeaways
- 4 Special Considerations
- 5 Types of Cash Flow
- 6 How to Analyze Cash Flows
- 7 How Are Cash Flows Different Than Revenues?
- 8 What Are the Three Categories of Cash Flows?
- 9 What Is Free Cash Flow and Why Is It Important?
- 10 Do Companies Need to Report a Cash Flow Statement?
- 11 Why Is the Price-to-Cash Flows Ratio Used?
What Is Cash Flow?
The term cash flow refers to the net amount of cash and cash equivalents being transferred in and out of a company. Cash received represents inflows, while money spent represents outflows. A company’s ability to create value for shareholders is fundamentally determined by its ability to generate positive cash flows or, more specifically, to maximize long-term free cash flow (FCF). FCF is the cash generated by a company from its normal business operations after subtracting any money spent on capital expenditures (CapEx).
Understanding Cash Flow
Key Takeaways
- Cash flow is the movement of money in and out of a company.
- Cash received signifies inflows, and cash spent signifies outflows.
- The cash flow statement is a financial statement that reports on a company's sources and usage of cash over some time.
- A company's cash flow is typically categorized as cash flows from operations, investing, and financing.
- There are several methods used to analyze a company's cash flow, including the debt service coverage ratio, free cash flow, and unlevered cash flow.
Special Considerations
Types of Cash Flow
Cash Flows From Operations (CFO)
