What is defined as 'cash flow'?

The definition of 'cash flow' encompasses the total amount of money moving into and out of a business. This includes all cash receipts from sales, investments, and loans (inflows), as well as cash payments for expenses, debts, and dividends (outflows). Understanding cash flow is crucial for assessing an organization's liquidity, financial health, and capacity to sustain operations or invest in growth opportunities.

Profit after all expenses have been deducted represents net income, which can differ significantly from cash flow due to non-cash expenses like depreciation or changes in working capital. A measure of the cash available for dividends pertains only to a portion of cash flow, specifically assessing whether a company has enough cash to distribute to shareholders, rather than encompassing the entire cash flow picture. Revenue generated from core business activities indicates sales performance but does not account for cash outflows, essential for understanding the true cash position of a business.

Thus, the total cash flow is a comprehensive metric that provides vital insights for financial analysis and decision-making.