Lots of things can go negative in a business.  But the one thing you can’t let go negative for long is cash.

Cash is the life blood of a company and needs your full attention.  Keep in mind you can’t do anything without cash. The amount of cash or a cash equivalent that a company gives out by way of payments to creditors is known as cash flow.  It can be either positive or negative.

Positive cash flow means you have more cash at the end of a given period than at the start. Negative cash flow means you have less than you had at the start.


If your cash flow has gone negative it means somewhere in the three types of cash (operating, investing and financing) something is not tracking. Maybe cash has been spent to pay down debt.  That, however, means there is little to no cash for investment or financing.

It’s a balancing act between the three cash types.  And when it is out of whack, the company isn’t flying straight.

While it isn’t the only metric you should use to measure a company’s value, it is critically important. The balance sheet can also play a key role in helping you analyze the value of a company.  More on that later or in this previous blog post.

Whatever you do, pay attention to your cash flow.  Positive is good, negative, not so good.

A successful, profitable, well-run company should pay attention to metrics including cash flow.  We are here to help.

 The TFO Solutions Team