Cash flow analysis

Cash flow analysis is the study of the cycle of business' cash inflows and outflows, with the purpose of maintaining an adequate cash flow for business, and to provide the basis for cash flow management.

Cash flow analysis involves examining the components of business. By performing a cash flow analysis on separate components, to be able to more easily identify cash flow problems and find ways to improve cash flow. Cash flow indicators focus on the cash being generated in terms of how much is being generated and the safety net that it provides to the company. These ratios can give users another look at the financial health and performance of a company. The ratios use cash flow compared to other company metrics to determine how much cash they are generating from their sales, the amount of cash they are generating free and clear, and the amount of cash they have to cover obligations. Cash flow ratios reduce risk for lenders and investors and enable owners, managers and consultants to increase productivity and business profits.

Sign up

back to top