Target cash flow

The term “target cash flow” refers to a company’s targeted or projected cash flow for a specific period. Cash flow, the amount of money coming into or going out of a business, is a key indicator of a company’s financial health.

It is an important metric for companies because it shows how much money the company is expected to generate to cover current operating expenses, make investments, service debt and generate profits.

Determining the target cash flow requires a thorough analysis of the company’s sales, costs and other financial variables. Companies often prepare target cash flow projections for different time periods, such as a quarter, a fiscal year or even several years, in order to plan and monitor their financial performance.