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Welcome to Professor Savings.com
We teach finance basics.
Hi, I’m you’re host today Rayfil Wong.
Todays topic, what is cash flow?
The formal definition of cash flow is the movement of money into or out of a business.
Let’s say Jane here owns a cupcake restaurant and she needs to manage her cash flow.
This means she needs to have cash to pay her employees, pay herself, pay her creditors, and
one way this cash flow is created is by the cupcake sales.
On a personal level, Jane needs to pay her rent and car bills.
Basically cash flow is how money is spent during the month
Let’s get into more details.
Jane’s operational cash flow as it’s name hints keeps Jane’s cupcake business running.
It is the cash received from selling cupcakes and spent on the business of operating.
Cash is spent on paying employees or paying the vendor that sells her the flour and sugar.
Taking care of cash flow is the key to keeping your business running and growing.
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