Financial modelling terms explained

Cash

Cash is one of the two main financial assets of a company, the other being equity. Cash is a liquid asset that can be used to buy goods and services or to pay off debts

What is Cash Flow?

Cash flow is the movement of cash in and out of a business. This can be tracked on a cash flow statement, which shows the sources and uses of cash over a period of time. The cash flow statement can be used to track the business's liquidity, assess its financial health, and make decisions about future investments.

How Do You Calculate Your Cash Flow?

The calculation of a company's cash flow is an important aspect of financial modelling. In order to calculate a company's cash flow, one must first calculate its net income. This is done by subtracting a company's expenses from its revenues. Once the net income is calculated, one then needs to subtract the company's capital expenditures and its changes in working capital from that number. The remaining number is the company's free cash flow.

What is the Difference Between Cash Flow and Profit?

Cash flow is the movement of cash in and out of a business, while profit is the net income of a business over a period of time.

Cash flow is important because it is a measure of how well a business is generating cash from its operations. This is important because a business can't survive if it doesn't have enough cash to pay its bills.

Profit is important because it is a measure of how well a business is doing financially. A business can't survive if it doesn't make a profit.

Get started today with Causal

Start building your own custom financial models, in minutes not days.