Cash flow

Cash flow is the movement of cash into and out of a person, business, or project over a period of time. Its timing and direction show whether funds are available to meet obligations.

Cash inflow: Cash received by a person, business, or project during a period. Inflows are the incoming side of the movements tracked in cash flow.
Cash flow forecast: An estimate of future cash receipts and payments over a defined period. Forecasts anticipate shortfalls or surpluses before they occur.
Free cash flow: Cash generated after operating costs and capital expenditures, available to creditors and owners. It estimates cash remaining after a business funds its operations and asset investment.
Profit: The excess of recognized revenue over recognized expenses during a period. Profit follows accounting recognition rules, while cash flow tracks actual cash movement.
Cash outflow: Cash paid by a person, business, or project during a period. Outflows are the outgoing side that reduces available cash.
Direct method: A method of reporting operating cash flow by listing major cash receipts and payments. It presents operating cash movements directly rather than reconciling from profit.
Operating cash flow: Cash generated or used by a business’s principal revenue-producing activities. It isolates cash produced by ordinary business operations.
Revenue: Income recognized from selling goods or providing services during a period. Revenue may be recorded before customers pay, so it is not necessarily cash inflow.
Net cash flow: Cash inflows minus cash outflows over a specified period. This difference summarizes whether cash increased or decreased during the period.
Indirect method: A method of calculating operating cash flow by adjusting net income for noncash items and working-capital changes. It reconciles accounting profit with cash generated by operations.

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