Cash flow

Definition:

Cash flow shows the net amount of liquid funds flowing in and out of a company over a given period.

Details:

It is a key indicator of a company’s financial stability and liquidity.

• Operating cash flow: from core business operations
• Investing cash flow: from asset purchases or sales
• Financing cash flow: from loans, capital increases, or dividends

Relevance in a transaction context:

Stable cash flow is critical for company valuations – especially in methods like the Discounted Cash Flow (DCF) approach.