Cash flow refers to the net movement of cash in and out of a business over a period of time.

Some examples of cash flow drivers are:

• Days Sales Outstanding

• Days Inventory Outstanding

• Days Payable Outstanding

• Sale or Purchase of Assets

• Incurring or Paying Down Debt

• Owner Investments or Draws

Analysis of cash flow drivers can produce great results when leveraged correctly.

Cash flow is determined by analyzing the balance sheet along with the income statement, to get a more comprehensive view of the financial position of your business. Cash flow is also a key determinant in maintaining healthy liquidity and solvency ratios.