What is ‘cash flow’?
Answers
the total amount of money being transferred into and out of a business, especially as affecting liquidity.
Cash flow is a process of making payments or receiving payment for the purchase or sale made through rendering goods and services.
EXPLANATION-
Cash flow in business is understood as the process of creating money through money in various forms.
For example- the Bater system was a flow of material in exchange with each other. But, money flow or cash flow is an exchange of money in the process of acquisition or rendering the goods and services.
Cash flow is a whole process channelizing the money from one source of payment or income to another income of payment. The liquid amount of money that is in a process into the market fulfilling everyone's needs and wants is said money in the flow. Cash flow has a different impact on all three areas of economic. In accountancy, cash flow is understood as a financial statement of a certain firm or certain year.
Whereas, in the economy, the cash flow is significant how the economic conditions of the areas are in inflation, deflation or stagnant. On another hand, in business cash flow is a situation of decapitalizing the money into small funds and utilizing then for growth and development.
Hence, cash flow is none other than the understanding regarding the process and channelizing of money into the economy, firm or society.
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