What is cash flow?
English cash flow is nothing more than cash flow, which is responsible for monitoring financial cash movements. This tool is used to control the inflows and outflows, which is different from the accounting profit, which considers the income from income received or paid.
In other words, cash flow, or the cash flow in English, determines what your profit is within a given period. In addition, it is able to indicate whether or not there is negative cash control.
This can happen when the company has sold a lot but has not received payments as it should. In general, the cash flow in English (cash flow) is able to show the financial reality of your business.
Not to mention that it still indicates availability for spending and maintains the smooth running of activities in this area. It is worth mentioning that the cash flow analysis does not replace the economic profitability analysis, but rather complements it.
1. What is economic and financial feasibility analysis?
The analysis of economic and financial viability is the study that measures or analyzes whether an investment is viable or not. That is, it is the way used to compare the returns that can be obtained with investments demanded. From this analysis it is possible to decide if it is really worth investing in cash flow in English.
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2. What to evaluate in English cash flow (cash flow)?
To evaluate a cash flow in English (cash flow) and identify if it is correct, it is necessary to analyze the profit that comes in and the costs that leave the place. Without these points, it is very difficult to have any kind of vision about your cash flow.
But, in addition to these points, it is also important to survey all the data that refer to the company's cash. And, of course, from the expenses side, it is always good to have possible problems that arise from time to time.
Ideally, all of this information should be placed in a cash flow spreadsheet, as it will provide more clarity for the observation.
3. What is the benefit of cash flow in English (cash flow)?
Realizing cash flow, or any other type of cash flow, is a great benefit to your establishment. One of the main advantages it is in relation to the transparency of the accounts that the place has to receive and what it needs to pay.
When you have monthly or even daily cash flow control, you can avoid fraud and even project investments. Another valid point to be highlighted is in relation to the financial situation, which is much easier to control.
Not to mention that cash flow prevents crises in this sector. Cash flow for companies only brings benefits! But even if your business works with cash flow, be it simple or discounted, incremental, for example, it can still have financial problems.
If you are experiencing something like this, it is recommended that you contact your accountant as soon as possible.
4. What are the types of cash flow?
When it comes to cash flow, it must be clear that it is cash flow. In this sense, it is worth mentioning that there are some types of this tool and each style has an application and function.
Check below for more details on the types of cash flow:
- Operational Cash Flow: it is everything that enters and leaves the establishment in relation to commercial activity, such as: income from sales and expenses of personnel and suppliers;
- Cash Flow for investment activities: amount received or spent according to the company's investments. It refers to payments for investments in non-current assets and resulting from their sale or amortization at maturity;
- Cash flow from financing activities (Financing Cash Flow): amount received from issuing shares or debt less money paid as dividends and repurchasing debts;
- Free Cash Flow “Free Cash Flow”: Operating cash flow less capital expenditures. This is the amount that is available for the company to carry out its expansion projects, acquisitions or maintain financial stability in difficult times;
- Capital expenditure “Capital Expenditure or CAPEX”: it is the expense incurred to acquire productive assets (vehicles, machines or equipment).
Stay tuned: cash flow is a simpler and more objective measure than accounting profit. It provides a more rigorous view of the company's financial reality, through which it is demonstrated the extent to which it is able to generate financial resources and a good functioning.