What Is Cash Flow?
Cash flow is the movement of money into and out of a household or business over a period. Positive cash flow means more money comes in than goes out; negative cash flow means spending exceeds income, which has to be covered by savings or borrowing.
Formula
Net cash flow = total cash inflows − total cash outflows for the period.
Cash Flow vs. Profit
For a business, profit is an accounting measure, while cash flow tracks actual cash. A business can be profitable yet short of cash if customers pay late or money is tied up in inventory.
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🔗 Related Terms
More Personal Finance Terms
- 50/30/20 Rule
- Bill Splitting
- Checking Account
- Consumer Price Index (CPI)
- Cost of Living
- Credit Union
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.