Cash Flow

Understanding Cash Flow

Cash flow refers to the movement of money in and out of a business. Positive cash flow indicates that a company’s liquid assets are increasing, allowing it to settle debts, reinvest in its business, pay expenses, and provide a buffer against future financial challenges. For startups, managing cash flow effectively is crucial to ensure operational health and long-term growth.

Types of Cash Flow

• Operating Cash Flow: Cash generated from a company’s core business operations.
• Investing Cash Flow: Cash used for investing in assets, or cash received from the sale of investments.
• Financing Cash Flow: Cash received from borrowing or issuing stock, minus repayments and dividends paid.

Related Terms and Concepts

Liquidity, working capital, profit, burn rate