Cash flow

In investments, it represents earnings before depreciation , amortization and non-cash charges. Sometimes called cash earnings. Cash flow from operations (called funds from operations ) by real estate and other investment trusts is important because it indicates the ability to pay dividends. The New York Times Financial Glossary

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cash flow ˈcash flow also cashflow noun

1. [uncountable] FINANCE the amounts of money coming into and going out of a company, and the timing of these:

• the lack of cash flow that results from customers not paying bills on time

• The business is suffering severe cash flow problems.

• He will have to keep to a business plan with strict month-by-month cash flow projections.

ˌnegative ˈcash flow [uncountable] FINANCE

a situation where more money is going out of a business from its commercial activities than there is coming in:

• Vacancy rates of 25% or more indicate a negative cash flow on the property, meaning the owner must rely on other sources of cash to meet interest payments and other expenses.

2. [countable, uncountable] ACCOUNTING profit made by a business in a particular period of time, measured in different ways by different businesses:

• Time Warner defines cash flow as earnings before interest payments, taxes and depreciation.

• Volvo needs to raise production to 500,000 units to generate the cash flow (= to produce it ) required for expensive new model development programmes.

• The company announced an increase in its after-tax cash flow.

ˌfree ˈcash flow ACCOUNTING

[uncountable] profit from a company's operating activities, less capital (= money spent on machinery, buildings etc) and taxation:

• The company generated £200 million of free cashflow this year, so it could make another acquisition soon.

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   Cash flow is the sum of pre-tax profits and depreciation allowances and is a key figure in a company's financial statement. The term is also used to describe the stream of funds received by a bond holder from the periodic receipt of interest payments.

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cash flow UK US (also cashflow) noun [U] ACCOUNTING, FINANCE

► the movement of money into and out of a company's accounts, used as a measure of how much money the company spends and receives and how much profit it makes over a particular period of time: good/healthy/strong cashflow »

It is a well-run company with strong cashflow.

improve/maintain/maximise cash flow »

Bartering can help you generate sales and improve cash flow and profits.

»

a cashflow problem/crisis

● negative cash flow — Cf. negative cash flow

● positive cash flow — Cf. positive cash flow

→ See also FREE CASHFLOW(Cf. ↑free cashflow)