Refers to the net amount of cash generated by a company over a specific period of time.The cash flow statement and the income statement are completely different financial statements. Net IncomeĬash flow and net income share some similarities but they are different items with unique calculations and purposes. Often referred to as "the bottom line," net income is reported by public companies on both quarterly and annual income statements. To calculate net income, total expenses are subtracted from total revenue. If total expenses exceed revenue, this company has realized a net loss. Net income is an accounting measure that reflects the difference between the amount of revenue that a company earns and total expenses for the same period. Free Cash Flow reflects cash that a business can use to invest in growth or other value maximizing purposes. Investors commonly look at FCF to assess the cash flow strength of a company. Free Cash Flow (FCF), is the amount of operating cash flow remaining remaining after a business pays for necessary upkeep of its equipment and operations.Cash Flow from Operations (CFO), or sometimes referred to as Operating Cash Flow, reflects only the cashflows directly related to a company's business operations.Positive cash flow means that more money is coming in than going out, while negative cash flow means the business is spending more than it's receiving. Cash flow in a business refers to the amount of cash coming in and out of a company during a specific point in time.Free cash flow represents what's remaining from CFO after expenses necessary to maintain the equipment and operations of the company.ĭefinitions of cash flow and free cash flow are: Cash Flow from Operations (or CFO) reflects the cash flow attributed strictly to a company's business operations. Put simply, cash flow reflects money coming into and going out of a business. NicoElNino/iStock via Getty Images Cash Flow & Free Cash Flow Definitions
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