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Understanding Cash Flow: Importance, Types, and Management

Cash flow is the amount of cash that flows in and out of a business over a specific period.

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It is important for businesses to understand their cash flow to make informed decisions and ensure financial stability.

There are two types of cash flow: cash inflow and cash outflow.

Cash inflow refers to the money coming into the business, while cash outflow refers to the money going out of the business.

Cash flow can be managed through effective cash flow management strategies.

Cash flow management involves monitoring and analyzing cash inflows and outflows, forecasting future cash flows, and implementing strategies to improve cash flow.

There are three main types of cash flow: operating activities, investing activities, and financing activities.

Operating activities include cash inflows and outflows related to the day-to-day operations of the business, such as sales and expenses.

Investing activities include cash inflows and outflows related to investments in assets, such as property, plant, and equipment.