Business Cash Flow Analysis Guide
Types, methods, indicators, and actions.
Cash Flow Types
Operating cash flow
Source: Core business
Importance: Primary
Investing cash flow
Source: Asset activities
Importance: Secondary
Financing cash flow
Source: Capital activities
Importance: Secondary
Free cash flow
Source: Available capital
Importance: Key metric
Analysis Methods
1. Direct method analysis
2. Indirect method analysis
3. Cash flow forecasting
4. Break-even analysis
5. Working capital analysis
6. Cash conversion cycle
7. Liquidity ratio analysis
8. Cash budgeting
9. Trend analysis
10. Comparative analysis
Key Indicators
Cash ratio
Formula: Cash/Current liabilities
Interpretation: Immediate liquidity
Quick ratio
Formula: (Cash+Receivables)/Liabilities
Interpretation: Near-term liquidity
Operating cash ratio
Formula: OCF/Current liabilities
Interpretation: Operational liquidity
Cash burn rate
Formula: Cash/Monthly expenses
Interpretation: Survival months
Improvement Actions
1. Accelerate receivables
2. Delay payables
3. Reduce inventory
4. Cut operating costs
5. Increase sales velocity
6. Negotiate better terms
7. Optimize payment timing
8. Improve collection process
Cash Flow Analysis Checklist
1. Analyze operating cash flow primarily. 2. Review investing cash flow secondarily. 3. Examine financing cash flow carefully. 4. Calculate free cash flow regularly. 5. Forecast cash needs accurately. 6. Monitor liquidity ratios daily. 7. Track cash conversion cycle. 8. Accelerate receivables collection. 9. Optimize payment timing. 10. Maintain adequate reserves. Cash flow analysis = financial health. Operating flow analyzed. Investing flow reviewed. Financing flow examined. Free flow calculated. Needs forecasted. Ratios monitored. Cycle tracked. Receivables accelerated. Timing optimized. Reserves maintained.