This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
The flow of money into and out of the business. Understanding the Cash Flow of a business is as essential as understanding Profit; the two have to be managed separately.
See Cash Flow Statement for a description of the Cash Flows in and out of the business.
See also Cash Flow Forecast (CFF).
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Income|Outcome Learning Profit is like food: you need it for the business to grow and to be healthy and strong; but you don’t have to eat all the time. But Cash is like air – you need it constantly. If you run out, and cannot immediately get more, you die. Profit happens on the Income Statement. Cash Flow happens on the Balance Sheet. |
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.