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Cash flow


The flow of money payments to or from a firm. Expenditure is sometimes referrecash flow of a business is the gross profit (after payment of fixed interest) plus depreciation provisions in any trading period, i.e. that sum of money which is available for investment, dividends or payment of taxes: The net cash j/ow is retained earnings and depreciation provisions · before or after tax. Net cash flows of a particular project are usually defined as arising after taxes have been paid, expenditure on repairs and maintenance has been carried out and any necessary adjustment made to working capital, and account is taken of any residual value of assets at the enµ of a particular project's life or other rniscellaneous income accruing to the project or business. This term is important in investment appraisal. 'Cash flow statement' is often used synonym­ously with 'statement of sources and uses of funds'.

Reference: The Penguin Business Dictionary, 3rd edt.