I read a lot about the definition but I can’t really get the hang of it.
Is it the cash that the company is left with at the end of the period? (Meaning the cash in their bank accounts *hypothetically*)
In: 14
A lot of people are responding and talking about companies like the OP, but it’s worth noting that the concept of cash flow is more general and can apply equally well to personal finances, cash flows from individual rental properties, and the like.
It’s a complement to an income statement, which shows profits and losses. The two aren’t always the same, because not everything involves cash. For example, some businesses that produce positive cash flow might be unprofitable because they also have depreciation expenses (i.e. the decline in the value of an asset). Similarly, an individual might have negative cash flow because they bought an asset that they didn’t sell in the same period.
The details matter, too. A business with positive cash flow, where operating cash flow is negative and cash is coming in from issuing debt might not be a good thing. Similarly, negative cash flow where operating is positive and high use of cash for retiring debt may be a good thing if their leverage is high, and they’re using cash flow to delever.
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