Cashflow

The term Cashflow describes the capital flow, specifically the inflow and outflow of funds within a company over a specific period. It is a critical financial indicator and reflects the liquidity and financial health of a company.

It can be determined using both direct and indirect methods. With the direct method, figures from the income statement are utilized. Here, all payment expenses (e.g., rent, wages, material costs) are subtracted from all payment revenues (e.g., sales, receivables). The indirect method, on the other hand, starts with post-tax net income as the basis, then considers the net effect on the company.

If the result of either method yields a positive cashflow, it means more money is flowing into the company than out of it. Conversely, if it’s negative, more money is flowing out than in. The result is used for monitoring and for taking measures in good time.

Additionally, QVANTUM’s integrated financial planning can also be used to plan cashflow. This transparent planning enables better decisions to be made.

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