Cash flow is the net balance of cash that moves in and out of a business. Cash flow can either be positive or negative, with most businesses aiming for positive cash flow.
A positive cash flow signals there is more money moving into than out of a company, while a negative cash flow means a company has more money moving out than in.
Cash flow has plenty of uses in analyzing financial performance, such as the Cash Conversion Ratio and Cash Conversion Cycle. It is one of the most crucial metrics for business owners to keep an eye on because it is a strong indicator of financial health.