Net Cash Flow is the stream of cash that the owner can withdraw for consumption or reinvestment elsewhere, which includes all cash flows relating to an enterprise and all cash outflows for operating expenses, capital expenditures, and income taxes.

Question

Fattykins

Business

31 March, 12:49

Net Cash Flow is the stream of cash that the owner can withdraw for consumption or reinvestment elsewhere, which includes all cash flows relating to an enterprise and all cash outflows for operating expenses, capital expenditures, and income taxes.

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Nick · Answer 1

The correct answer is True.

Explanation:

Net cash flow is an accounting term that describes the movements of cash (income and expenses) in a given period.

For example, if in a month your income is 20,000 dollars and you spend 18,000 dollars, you have a net positive cash flow of 2,000 dollars. That is, you are spending less than you earn but you are also increasing your assets every month.

But if your expenses - following the same example - were $ 23,000, it means you have a net negative cash flow of $ 3,000. In other words, every month you are "burning" your heritage. You are spending more than you earn and we all know that in the long run that is not sustainable.