The concept of cash flow, translated into Spanish as cash flow, refers to the inflows and outflows of cash or cash in a specific period of time. This allows it to become a perfect indicator of the liquidity of a specific company.
Thanks to the cash flow, it will be possible to know the account statement, the cash that remains in it after removing the expenses, capital payment and Bank interest.
The definition of casf flow is an accounting statement that presents information about the different cash movements and their operations. The cash flow study of a company will be used to specify a series of aspects such as the viability study investment, liquidity problems or the measurement of the profitability Of a company.
Classification of cash flows
Cash flows or cash flow can be structured as follows:
- Investment cash flows: cash collected or expended considering capital investment expenses that will benefit the business over time, such as acquisitions or investments.
- Operational cash flows: cash collected or expended as a result of the basic economic activities of the company.
- Financing cash flow: cash received or issued as a result of financial activities such as payment or receipt of loans, repurchase or issuance of shares and payment of dividends.
Cash flow example
Cash flow consists mainly of the sum of the items considered as ingresos, less capital outflows. The cash flow formula could be the sum of sales and the sum of Suppliers, to which would be subtracted taxes, variable costs, variable costs, sum of sales credits, sum of inventories and sum of fixed assets.
The analysis of cash flow can be of great help for small and medium-sized companies, which are generally those that have problems of lack of liquidity to meet the most urgent needs. By making forecasts, it will be possible to solve the situations that arise more quickly.