What is the definition of "Cash Flow"?

Question

Let's think that the renenue of a company is $300000 and the Cash Flow is $120000.
Is Cash Flow net profite?
What does it mean?

Answer 1

Cash flows consist of cash inflows (like when your customers pay you) and cash outflows (like when you pay your creditors). In your context, I think what they mean is your revenue is $300,000, but $180,000 was sales made on account (credit sales), so only $120,000 was received in cash. Cash flow is not net profit.

Answer 2

In a business, your cash-flow is always going to be the net difference after expenses.

In higher business thought however, cash-flow might also include company stock sales, though this can not be technically considered profit.

In your example $300k might be considered "gross" or total revenue. For us to arrive at a "cash-flow" of $120k we have to apply a little reverse math to this equation and we get a $180k expense base.

Here's a formula to use:

Gross Income - Expenses = Cash Flow (Net Profit)

All I did was the reverse:

Gross Income - Cash Flow (Net Profit) = Expenses

Check out the CashFlow Games by Robert Keyosaki, this will help you really nail the concept while having fun.

Answer 3

Cash flow to me is the money you have to do things with. If your revenue is 300k, you pay your bills, and 120k is there to do the rest.
Look these things up in the back of your book.

However, I own apartments and the rent I receive is sometimes called cash flow, meaning cash coming in without considering the bills to be paid.

Your at a place in accounting where they want you to know a specific explanation for that term. Look it up.