Cash Flow

The term cash flow, when used generally, denotes a measurement of the incoming and outgoing liquid assets of a company.

Typically, cash flow is calculated by adding write-offs and accruals to profit without accounting for irregular revenue.

In other words, cash flow is the difference between financial inflows and outflows within a specific timeframe. If inflows are higher than outflows, the cash flow is said to be positive. If outflows exceed inflows, the cash flow is said to be negative.

In financial mathematics, the term cash flow denotes a series of payments which are linked to specific points in time. The periods of time between payments and a reference point can be used as an alternative to points in time.

Cash flow plays a central role in financial mathematics. Among other uses, it serves as the basis for the calculation of the internal rate of return of investments.