Cash Flow - How does a cash flow work?

Q: How does a cash flow work?

Cash flow is calculated by making certain adjustments to net income by adding or subtracting differences in revenue, expenses, and credit transactions (appearing on the balance sheet and income statement) resulting from transactions that occur from one period to the next.

Answer

A change in revenue, change in costs, or change in credit transactions (seen on the income statement and balance sheet) from one period to the next can lead to changes in net income, which can be adjusted in a number of ways to get at cash flow.

Cash Flow - How does a cash flow work?

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