Cashflow

The movement of cash in and out of a business from day-to-day direct trading and other non-trading or indirect effects, such as capital expenditure, tax and dividend payments.

One of the three essential reporting and measurement systems for any company. The Cashflow Statement provides a third perspective alongside the Profit and Loss account and Balance Sheet. The Cashflow Statement shows the movement and availability of cash through and to the business over a given period, certainly for a trading year, and often also monthly and cumulatively. The availability of cash in a company that is necessary to meet payments to suppliers, staff and other creditors is essential for any business to survive, and so the reliable forecasting and reporting of cash movement and availability is crucial.

Updated On: 09.10.04