Does cash flow in your business mean the money you make or the money your business make with paying for the employees?

I am just looking at dry cleaning stores and looking for a business to buy when I hopefully get done training with my brother after 1 or 2 years and was just wondering does cash flow mean the money you make or the money your business makes that accounts for paying the employees?

Best Answer:

Austin: Cash flow is nothing more than cash received by a business and cash paid. In accounting terms cash flow is divided into three categories:

Operating activities is cash coming in from selling goods and services to customers and cash going out from paying expenses that enable you to sell goods and services: rent, wages, utilities, etc. Hopefully, this cash flow is positive, i.e. more cash flowing in than cash flowing out.

Investing activities are the cash paid and received from investing in fixed assets such as equipment, furniture and fixtures, land, buildings, etc, and the disposal of those assets by sale.

Financing activities is cash flowing in from long-term borrowing, issuing stocks and bonds, and cash flowing out to repay debts and pay dividends.

When you combine these three cash flows, you get net cash flow for the business, which may be positive or negative. Cash flow is not a measure of business profitability. Before you buy a business make sure you understand how it is doing and what it can accomplish in the future. It is best to hire a consultant to investigate the business you are considering buying and to explain to you how the business is doing, to make sure you don't make a serious mistake.

Other answer:

cash flow means the cash that flows thru, if your business is based on credit, ie. the customer pays later, your 'cash flow' for the month will probably be at a stand still, more going out than coming in
when the customer pays at the end of the month then your cash flow is huge in comparison with the daily routine in between
the money you made is the difference between what you get paid to perform and your expenses you have to pay
Cash flow is the cash paid and received by the business during an accounting period.
Cash flow is the money that comes in and goes out, by category
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Neither, do your research to learn what "cash flow" is and how it affects a business.

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