This is How Managing the Three Types of Cash Flow to Achieve Financial Stability

kelolalaut.com Types of cash flow are divided into three main categories based on activities that affect cash movement. Here is a complete explanation:

1. Operating Cash Flow

This cash flow reflects the movement of cash from the company's main operational activities, which are the daily activities related to the core business.
Characteristics:

1. Arises from transactions that generate revenue or routine expenditures.
2. Indicates the company's ability to generate cash from its operations without relying on external funding sources.

Examples of Cash Flow:

Inflow:

• • Receipts from the sale of goods or services.
  • Interest and dividend income (if relevant).
  • Receipts from customer receivables.

Outflow:

• • Payments to raw material suppliers.
  • Payments for salaries, rent, and utilities.
  • Tax payments or other operational expenses.

2. Investing Cash Flow

This cash flow is related to the purchase and sale of long-term assets and other investments.

Characteristics:

1. Indicates expenditures to support long-term growth or income from investment assets.
2. Usually irregular.

Examples of Cash Flow:

Inflow:

• • Sale of fixed assets such as land, buildings, or machinery.
  • Returns from portfolio investments (e.g., sale of stocks or bonds).
  • Receipts from completed projects.

Outflow:

• • Purchase of fixed assets or new equipment.
  • Investments in stocks, bonds, or other companies.
  • Costs of developing long-term projects.

3. Financing Cash Flow

This cash flow reflects the movement of cash related to external funding sources.

Characteristics:

1. Related to transactions involving the company's equity or debt.
2. Indicates how the company finances its operations and returns capital to shareholders or lenders.

Examples of Cash Flow:

Inflow:

• • Receipts from issuing new shares.
  • Loans from banks or issuing bonds.

Outflow:

• • Dividend payments to shareholders.
  • Repayment of loans or interest on debt.
  • Company stock buybacks.

Conclusion:

These three types of cash flow complement each other to provide a complete picture of the company's financial condition. Operating cash flow shows core performance, investing cash flow shows how the company supports growth, and financing cash flow shows how the company finances its activities.

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