What is Cash Flow?

Definition of:   Cash Flow

Cash Flow is an accounting term that refers to the amount of cash being received by a business during a defined period of time. When searching for a business for sale on BusinessMart.com, you will see the field "Cash Flow." This estimate, which is provided by the seller, is usually based on a 12-month period.

Cash Flow most generally stands for the amount of cash at the bottom line of the profit-and-loss statement or tax return. What is often referred to as Cash Flow in small businesses for sale is actually the Seller's Discretionary Cash Flow, Adjusted Income/Profit or Owner Benefit figure. This is typically the total of net income, owner salary, perks, depreciation, interest, and non recurring expenses.

For more info on this see: What is Seller's Discretionary Cash Flow?

    If you are in the process of buying a business, it is very important that you get a breakdown of what is included in this so called "Cash Flow" number.


About the Author