Net cash flow refers to the difference between a company’s cash inflows and outflows in a given period. It is the sum of cash flow from operations, cash flow from investing and financing.
For example…
Let’s say Tara wants to open up another news agency in the next suburb. She needs to analyse her current store’s net cash flow to determine whether it is positive or negative. After adding up the cost of operating her store, the investments she’s made and loans she’s taken out, she then realises that her net cash flow is minus twenty thousand dollars. She decides to borrow money from the bank and set up her second store anyway as she believes the second store will soon start generating income that will make her net cash flow positive again.
