cash flow

noun

Definition of cash flow

1 : a measure of an organization's liquidity that usually consists of net income after taxes plus noncash charges against income

2 : a flow of cash especially : one that provides solvency

Examples of cash flow in a Sentence

We were able to maintain a steady cash flow. The company is looking at new ways to generate cash flow.

Recent Examples on the Web

When the financial crisis trickles down and curbs the cash flow of their Wall Street clients, whose predatory practices set a dubious moral example for the titular antiheroines, Ramona transforms into something like Gordon Gekko in a G-string. — Los Angeles Times, "How Lorene Scafaria’s ‘Hustlers’ turned a tabloid stripper drama into an ode to female empowerment," 6 Sep. 2019 Because the slotting system is based entirely on math, so there are certain things regarding the language of the contract—like cash flow and offsets—that are negotiable. — Albert Breer, SI.com, "NFL Officials Still Aren’t Sure How the New Pass Interference Replay Rule Will Work," 20 June 2019 Kanarek said in a report that the company is relying on Medicaid payment programs for cash flow and experiencing volatility in its medical group’s profits. — Laura Garcia, ExpressNews.com, "Historic Nix building for sale in downtown San Antonio," 28 July 2019 The class will cover ways to increase cash flow and how to plan for retirement. — BostonGlobe.com, "Tuesday’s business agenda," 2 July 2019 There also is scope for reducing high borrowing levels through cash flow and disposals. — Charley Grant, WSJ, "It’s Not Too Late for Bayer to Heal," 22 June 2019 For the first time since joining Penney in October, Soltau offered guidance for the rest of the year, saying Penney will end 2019 with positive cash flow and earnings before interest and other taxes in the range of $440 million to $475 million. — Maria Halkias, Dallas News, "J.C. Penney narrowed its loss on a 9% sales drop as CEO Soltau said, "we are rebuilding a business"," 15 Aug. 2019 Inflation erodes the purchasing power of bonds’ future cash flows, so the higher expectations of future inflation are, the higher the yield investors will demand, and vice versa. — The Economist, "As yields turn negative, investors are having to pay for safety," 8 Aug. 2019 Discretionary accruals, which are noncash accounting items that involve some estimation, were more predictive of future cash flows at a company with a unified CFO-COO than at one with separate chiefs, the study found. — Mark Maurer, WSJ, "Companies Benefit From Combining CFO and COO Jobs, Study Finds," 8 July 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'cash flow.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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More Definitions for cash flow

cash flow

noun

Financial Definition of cash flow

What It Is

Cash flow is simply the cash expected to be generated by an investment, asset or business.

How It Works

As an investor, you buy a dividend-paying stock. You purchase the stock for $10 and the company pays you a $0.50 dividend each year. $0.50 is cash flow to you. You have valued the stock at $10 based on the stream of annual cash flows you receive each year. If the dividend drops to $0.25, the stock will be worth less to you, and if the dividend increases to $0.75, the stock will be worth more.

On a company level, assume a business had a good year and was able to increase the amount of cash flow it generated. It made more than it paid out. The company can either keep the cash to reinvest in future business prospects, or it can distribute the cash to its investors. Anyone who wants to put a price on the company as a whole will see the cash flow it generates and assign a value based on those cash flows.

A Cash Flow Statement is required to be filed with the SEC by every publicly-traded company. By examining it, an investor can track the sources of cash and the uses of cash throughout the covered time period.

Why It Matters

Cash flow should be the #1 priority for every investor. Any asset should eventually generate cash to pay back the capital that the investor has invested.

The value of any asset can be determined in three steps: 1) Estimate the future cash flows the asset will generate for you; 2) Pick an appropriate discount rate to account for the risk you're assuming by investing in the asset; and 3) Calculate the present value of the cash flows from #1 by discounting them to today's dollars using #2.

It is important to note that having temporary negative cash flow is not always a bad thing. If a company is spending more cash than it earns because it is building a more efficient manufacturing plant, for example, the investment should pay off later when the plant generates products that are turned into cash. On the other hand, if a company has negative cash flow because it's overpaid for acquisitions or made other poor investments, then the long-term benefits may never materialize.

Source: Investing Answers

cash flow

noun

English Language Learners Definition of cash flow

: the movement of money in and out of a business

See the full definition for cash flow in the English Language Learners Dictionary

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cash flow

Definition of cash flow

Examples of cash flow in a Sentence

First Known Use of cash flow

Financial Definition of cash flow

English Language Learners Definition of cash flow

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