What does CASHFLOW mean in small business?

Question

What does CASHFLOW mean in small mom&pop business? Does it mean their profit after all expenses after taxes or before taxes? or Does it mean total sales before subtracting expenses and taxes? or What does it mean?

For example if a small neighborhood convenience store has cashflow of $20,000, what does this mean? Does it mean owner makes that amount per year or per month before all expenses or part of expenses? Or does it mean the owner makes that amount per year or month after all expenses? Are they before taxes or after taxes? If not sure, please assume most likely.

Thanks in advance.

John · Accepted Answer

NoNoWhat is the reason are you asking about this example of "cash flow" ?   ahomework problem?   buying a business?In textbooks it usually means the net effect of actual hard cash (not loansor owners contributions) in business transactions..

Paul Thomas, CPA · Answer

"TINY"  wroteCash flow is the ability of the business and or the owners to have the cash available to pay the obligations of the business.IE: is there enough money available or coming in to pay the bills going out.Cash flow is not the business profits.  In fact, cash flow may be strong but the business shows losses, or, cash flow may suck but the books show profits.Nope - see above.Generally that - after all business expenses are paid - it has $20,000 left over.It might, but generally there are non-cash expenses that impact the bottom line.

What does CASHFLOW mean in small business?

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