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"Cash flow management"

"Cash flow management" impacts most aspects of a company's operations

"Cash flow analysis"

  • The main purpose of "cash flow analysis" is to reveal the causes of cash surpluses or shortages.
  • The results of "cash flow analysis" allows conclusions to be made on the following issues:
    • The sources of cash and its main uses within a company
    • A company's ability to cover its expenses and current liabilities with cash inflows
    • The company's cash inflows and whether or not it's sufficient to satisfy the company's current cash needs
    • Differences between the profits earned and the cash available

"Cash flow" is generally analyzed according to the company's three main activities:

  • operating
  • investing
  • financing

Cash flow from operating activities

  • Cash flow from operating activities includes those cash receipts and expenditures which result from the company's core sales and production activities.
  • Operating activities are the main source of the company's profit, so they should also be the main source of cash.

Cash flow from investing activities

  • Cash flow from investing activities include cash receipts and expenditures from acquisitions and sales of fixed assets and other investments (e.g., short term investments in securities).
  • The profitable company strives for expansion and modernization of its production capacities. In the short term, such investing activities will cause an outflow of cash.

Cash flow from financing activities

  • Cash flows from financing activities include cash inflows from loans and issuance of equities, as well as outflows related to debt repayments and dividend payments.


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