Small Business Resources > What is Cash Flow?
What is Cash Flow?
Definition of:ï¿½ï¿½ 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.
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