Cash Flow


In the field of economics, it is defined as Cash Flow (term of Anglo-Saxon origin), to describe the cash flow, that is, everything that is related to the outflow and inflow of cash or cash in a period of time. stipulated and for this reason it serves as a very useful tool to measure the liquidity that a commercial organization has.

Thanks to the cash flow it is possible to obtain information regarding the account statements, that is, the money that is in it after subtracting the expenses, the payment of interest, as well as the payment of capital. It is important to highlight that this is an account statement that includes data related to cash transactions and their equivalents.

In a business organization, cash flow can be used for different reasons, among which we can highlight the analysis of investment possibilities, anomalies in liquidity and also to be able to measure the profitability that a business may have, these are just to mention a few. of its uses.

The cash flow can be classified into several types, the first is the so-called investment cash flow, which will be the cash entered or withdrawn, but the investment capital expenses that can be of benefit must be taken into account. in the future. On the other hand, the operational cash flow is the cash that is issued or received from some economic activity. Another type is the flow of financing, this being the cash entered or issued, resulting from the repurchase of shares, loan payments, etc.

As has been verified, cash flow is a tool that can indicate in its content the data referring to depreciation, provisions and profits obtained in a given period, which can be very useful since it will allow us to know if in the future a company will have enough cash to meet operational needs and profit from it. This tool is very useful in the business environment, but especially for medium and small companies, since they are the ones that are commonly affected by the lack of liquidity and therefore cannot cover expenses.