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

But reported cash flow from operations under standard accounting rules for that same period was only about $6 billion. ... — Michael Rapoport, WSJ, "Has Kraft Heinz Made $24 Billion Since Merger or $6 Billion? It Depends," 5 Mar. 2019 As a result, London had to step in to keep the cash flowing in the region, which is administratively part of the United Kingdom, even though it is usually governed by its own Parliament and prime minister. — Rick Noack, Washington Post, "Why other countries don’t have government shutdowns," 9 Feb. 2018 Brewer’s analysis found that across the Football Bowl Subdivision, adjusted revenues were $5.6 billion, up 6.4% from a year ago, and the cash flow of $2 billion marked a 2.7% jump. — Andrew Beaton, WSJ, "How Much Is Your College Football Team Worth?," 7 Jan. 2019 Palmer isn't dealing with Beyonce money, but her 11,410 active patrons give her the cash flow to fund an endless string of projects. — Jed Gottlieb, Billboard, "How Amanda Palmer Is Raising Even More Funding Than She Did on Kickstarter," 11 July 2018 Wedbush’s Michael Pachter, who is one of the three analysts who rate the stock the equivalent of sell, has said in the past the negative cash flow will eventually cause a pullback in the stock. — Stephen Sweeney, Bloomberg.com, "Netflix's Subscriber Growth Momentum Trumps Cash Burn (for Now)," 6 Mar. 2018 Not every analyst, however, is betting on the robust cash flow growth to persist. — Esha Dey, The Seattle Times, "Boeing set for ‘excellent’ quarter, investors hungry for detail," 24 July 2018 Box, the business software company led by Aaron Levie, reported its fiscal first quarter earnings on Wednesday, posting revenues of $140.5 million—a record—and cash flow from operations of $18 million. — Andrew Nusca, Fortune, "Box Q1 2019 Earnings: $141 Million in Revenue, Up 20% Year Over Year," 30 May 2018 Son is reshaping Japanese mobile-phone carrier SoftBank into a technology investor, a move that could see Son follow business titans including Warren Buffett who have buttressed their conglomerates with healthy cash flows from reinsurance. — Patrick Winters, Bloomberg.com, "Swiss Re Says Adding Anchor Shareholder Would Be `Attractive'," 23 Feb. 2018

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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Last Updated

13 Mar 2019

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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