Cash Flow Analysis: Understand the Cow's Movement

Author(s): Amanda Fink

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Cash flow analysis, also known as cash flow projection, considers all factors that affect incoming and outgoing business cash in order to facilitate accurate analysis and predictions. Individual analyses of key cash components can identify problem areas and help mitigate issues. For instance, a cash flow analysis of accounts receivable will identify which customers consistently pay slowly.

What is Cash Flow?

Cash should not be confused with net income, which appears on the income statement and balance sheet. Cash includes currency, checks on hand, and bank deposits, while cash equivalents refer to highly liquid short term investments (i.e. treasury bills and certificates of deposit).

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