Cash flow (also usually referred to in German as Geldfluss, Kapitalfluss and Zahlungsstrom)

Unless explicitly defined otherwise – the net inflow of money, more specifically revenue from sales and other current activities less all costs, – into a company – within a given economic period. – Cash flow is considered an important indicator for assessing the financial situation of a company, especially in the context of rating. Its precise calculation, however, raises a number of difficulties, such as accrual or possible changes in inventories. – On the other hand, cash flow is normally considered to be a more reliable measure of a company’s earning power than profit, taking into account all the circumstances of the company, the industry or the market. This is because the determination of profit is valuation-dependent, for example through overly cautious depreciation, provisions, etc. Cash flow, on the other hand, is linked to payments and not to valuations. – A distinction is often made between – operating cash flow: inflow from operating activities, – investing cash flow: inflow from investments and – financing cash flow: inflow from financing activities. – See EBITDA, free cash flow, cash flow, cash cow, profit, operating, cash flow statement, core earnings, cost efficiency, price/cash flow ratio, timeline, interest rate risk.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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