Cash flow

Cash flow

Cash flow is the net earnings of the company before amortization, depreciation and any non cash charges. Positive cash flow in general is good for a company while negative cash flow is not good.

Positive Cash Flow

With positive cash flow, the company has the option to pursue R&D opportunities, share buybacks or even start to pay consistent dividends. Positive cash flow will add to the company’s cash and cash equivalents. In general, a trend of positive cash flow is good for the company’s day to day operations and for the shareholders of that company.

Negative cash flow

 If the company has been cashflow negative over a period of time, then, there is a high probability of bankruptcy.

Cash Flow Statement

The cash flow of the company can be found from cash flow statement. The cash flow statement will reflect the cash position of the company. Within the cash flow statement, an investor or options trader can find the operating cash flow figures and how financing and investment decisions affect the financial health of a company over a period of time.


The net profit or net income figures of a public listed company may be positive but the cash flow figures may paint a different picture altogether. Always remember to check the cash flow statement with the income statement.

Read: Free Cash Flow

Current Assets

EBITDA(Operating Cash Flow)

Current Liabilities