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What is Cash Flow?

Cash flow is the liquid flow of cash and cash equivalents into and out of a business.

Cash flow is an accounting metric that keeps track of the liquid assets going into and out of a business, project, or fund. Cash flow does not include accounts receivable, necessarily, because those funds may not be in-hand at the present time.

The cash conversion cycle (CCC) and some valuation calculations will use cash flow numbers. Accounts may demonstrate positive or negative cash flow, which is either adding to or decreasing total assets.

Revenue is money coming into a business, while cash flow includes money which is both coming in and going out. There are also different cash flow types, such as free cash flow and operating cash flow.

Cash flow analysis includes all cash received and expenses paid during a period, and is important for financial reporting. Cash flow coverage ratios and other metrics are useful for assessing the health of a business and its ability to meet its obligations in a timely manner.

Keywords: accounting, cash flow, cycles, revenue, expenses, cash flow coverage ratio, cash equivalents, cash conversion cycle,