PDSnet Glossary

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Definition

<p style="text-align: justify;">This is the amount of <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">cash</span> coming into a <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">company</span> less the amount going out. Cash flow is important because a <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">profitable</span> <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">company</span> can easily go <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">bankrupt</span> if its <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">profit</span>s are tied up in <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">stock</span> or <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">debtors</span>, leaving it with insufficient money to pay its creditors by the due date. Cash flow can be improved by reducing the "<span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">working capital</span>" of the company.</p>