The movement of cash into and out of a business, including cash inflows from revenues and financing and cash outflows for expenses and investments.
Cash flow refers to the movement of money into and out of a business over a specific period. It represents the net amount of cash generated or consumed by the business from its operational activities, investments, and financing. Positive cash flow indicates that the business is generating more cash inflows than outflows, ensuring liquidity and financial stability. On the other hand, negative cash flow indicates that the business is spending more cash than it is receiving, which may require adjustments to maintain financial health. Monitoring and managing cash flow is crucial for small business owners as it helps them assess the availability of cash to cover expenses, plan for future investments, and make informed financial decisions.