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Includes revenue, expenses, changes in working capital, and non-cash items like depreciation and amortization.Focuses on the cash generated or used in the company’s day-to-day operations.To gain a comprehensive understanding of a company’s financial landscape, cash flow analysis comprises three essential components: This newfound knowledge-empowered Sarah to take control of working capital management, meeting her financial obligations with precision. She gained a deeper understanding of the timing of cash inflows and outflows, enabling her to anticipate and plan for potential cash shortages or surpluses.Empowered with these insights, Sarah took decisive action, implementing strategies to optimize her cash flow.Although her revenue appeared promising, delayed payments and mounting expenses created a cash crunch.To tackle this dilemma, Sarah embraced meticulous cash flow analysis, uncovering a hidden truth: Yet, beneath the surface, she grappled with expense management and financial stability. Sarah’s retail store witnessed a surge in sales, hinting at success. Let’s explore this concept through Sarah’s story, a savvy retail store owner facing perplexing financial challenges:

It provides a comprehensive view of how cash moves through a business, highlighting the sources and uses of cash and offering valuable insights into its liquidity. Cash flow analysis examines and evaluates the inflows and outflows of cash within a company over a specific period.