Cash flow
Cash flow, like income, focuses on the difference between money coming in and money going out over a time period:
Cash Flow = Cash Inflows - Cash Outflows
A cash flow statement does not, however, include some items found in the income statement, such as depreciation expense. Depreciation expense, for example, does not represent an actual cash payment during the reporting period, but rather an accounting charge against earnings. As a result, depreciation expense is not a "cash outflow" in the above equation. The income statement tells stockholders and taxing authorities what the company is credited with earning during a period; the cash flow statement tells management how much cash they have to work with (or how much they gained or lost). The term net cash flow usually refers to the "net" of a cash flow stream, that is, cash flow results from a series of accounting periods, years or months.
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