What is Cash flow?

Cash flow is best understood as the difference between the money coming into the company and the money going out of it.

This is different from profit. Profit is the difference between the revenues and the costs of the company. Cash flow is the difference between what the company receives and what it spends. Therefore, not every cost is a real expenditure of money and therefore a decrease in ‘cash flow’.

So, cash flow is about: no matter your profitability, does the company has the money/cash to pay its bills?