Cash flow is basically the net amount of cash equivalents and cash that are moving in and out of your business. If there is a positive cash flow, that signifies that the company is a liquid asset, re-investing in the business, enabling to settle debts, paying expenses, returning money to shareholders, and providing a buffer against future financial challenges.

On the contrary, a negative cash flow highlights that the assets of the company are decreasing. Additionally, the net cash flow is determined from net income including accounts receivable and other items due to which payment has not yet been received. Required for assessing the quality of the company’s income and determining its liquidity, a statement of cash flow determines if the company is solvent or not. Click here to read more.