Cash Flow Defined

Cash flow is the actual movement (inflows and outflows) of cash within a business' operations (usually measured monthly). While the P&L (profit and loss statement) tracks the recorded revenues and expenses of the company, they often do not capture the reality of cash that comes into and flows out of the business. This is primarily due to accounting practices such as revenue recognition and non-cash items. Cash flow is the lifeblood of a business – learning to manage it properly is essential for success.

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