CASH FLOW
BUSINESS GLOSSARY 2022 SERIES
WHAT IS CASH FLOW?
Movement of cash and cash equivalant in a business.
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IN OTHER WORDS
A statement that shows how much money or money equivalent has come in gone out for a specific period.
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PART OF CASH FLOW
Operating Activities
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Investing Activities
Financing Activities
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OPERATING ACTIVITIES
1. Cash received from sales of goods and services.
2. Cash spent on ordinary operations.
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INVESTING ACTIVITIES
1. Cash received from sales of securities or assets.
2. Cash spent on buying securities or assets.
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FINANCING ACTIVITIES
1. Cash received as loan, equity liquidation.
2. Cash spent on paying loan, dividends.
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POSITIVE CASH FLOW
It indicates that the organization has more cash flowing into the business than cash required to support ordinary operations.
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NEGATIVE CASH FLOW
It indicates that the organization has less cash flowing into the business than cash required to support ordinary operations.
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IMPORTANT
Positive cash flow does not indicate the company is in profit.
Negative cash flow does not indicate the company is in loss.
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