Net Cash Flow
What is it?
Net Cash Flow is a key performance indicator that measures the difference between a company's or a property's cash inflows and outflows over a given period. It reflects how much cash is actually flowing in and out of the business and provides a clear picture of cash flow from operations, investments, and financing activities.
How is it calculated?
Cash Flow from Operations + Cash Flow from Investments + Cash Flow from Financing
* Only includes selected accounts in settings.
** Includes only net for specified time period.
Why is it important to follow?
Tracking net cash flow is essential for assessing the financial health and liquidity of a company or real estate project. Some key reasons are:
Liquidity
Net cash flow shows whether the business generates enough cash to cover its costs and future investments.
Financial sustainability
Positive net cash flow indicates that the business has enough capital to grow and sustain itself in the long run, while negative cash flow may signal issues in funding operations.
Investment decisions
Understanding where the liquidity comes from (operations, investments, or financing) helps property owners and investors make more informed decisions regarding future projects and investments.
Cost control
Cash flow analysis helps identify areas where expenses can be reduced or revenues increased to improve overall cash flow.
Risk management
A strong net cash flow provides greater flexibility to handle unforeseen financial difficulties or changes in market conditions.
Created by Homepal
10/1/2024
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