Cash flow

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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)

Cash Flows From Investing (CFI)

Cash Flows From Financing (CFF)

Cash Flow vs. Profit

How to Analyze Cash Flows

Debt Service Coverage Ratio (DSCR)

Free Cash Flow (FCF)

Unlevered Free Cash Flow (UFCF)

Example of Cash Flow

How Are Cash Flows Different Than Revenues?

What Are the Three Categories of Cash Flows?

What Is Free Cash Flow and Why Is It Important?

Do Companies Need to Report a Cash Flow Statement?

Why Is the Price-to-Cash Flows Ratio Used?

source:
https://www.investopedia.com/terms/c/cashflow.asp