Cash flow is tool what controls the financial movement (at inputs and outputs resources), in a given period, of a company.
Cash flow facilitates the management of a company in the sense of knowing exactly how much to pay with the obligations assumed, what are the amounts to be received and what will be the balance available in that time. Balance is the difference between receipts and payments.
When analyzing the cash flow, if the balance is negative it means that the company has overspending, in this case, the manager will have to review the expenses to be able to increase the inflow of money. On the other hand, a positive balance indicates that the company is managing to pay its obligations and have financial availability.
Cash flow is a fundamental resource for managers to know precisely the company's financial situation and, based on the result, decide the paths to follow.
The cash flow can be done in spreadsheet format (a template for making the cash flow) and many spreadsheets are available
online. Many companies carry out this financial control with the help of some computer programs such as Microsoft Office Excel.Discounted cash flow
Discounted Cash Flow is a valuation method used to estimate the attractiveness of an investment opportunity. This analysis uses future free cash flow projections and discounts them (most often using the weighted average cost of capital), to arrive at a current value, which is used to assess the potential for investment.
free cash flow
Free cash flow represents the money a company is able to generate, after setting aside the money needed to maintain or expand its asset base. Free cash flow is important because it allows a company to pursue opportunities that increase shareholder value.