Cash flow is the ability of a business to turn its product or service into cash. It is generally measured in dollars or in dollars against a time period. The simplest example I can think of is a child selling lemonade. The child purchases the lemonade and sugar in the morning, starts selling in the afternoon and by nightfall has turned all the lemons and sugar into cash. The child has the cash invested (lemons and sugar) back plus the profit made that day. However, it isn’t this simple in the real business world.
The cash flows statement in accounting is broken out into three major sections as follows: 1) Cash Flow from Operations 2) Cash Flow from Investing 3) Cash Flow from Financing Of the three, cash flow […]