More advanced commercial lenders might find it a good refresher. It is also appropriate for small business owners and managers who would like to understand how the bank will be making lending decisions regarding their borrowing needs. It can, however, use the accumulated net worth as a base for borrowing, if the assets representing the net worth truly have stable value and the business can demonstrate a highly probable later inflow of cash to repay the borrowing. Cash Flow is simply the inflow of cash and the outflow of cash from a business and net cash flow is the difference in the two. It can be negative at a time of profitability and often is during periods of growth.
Borrowing is more of a timing solution than a long-running source of cash.
Inflows Outflows 1. Initial or subsequent equity investment 1. Redemption of equity 2. Debt repayment 3. Excess cash receipts over cash expenses 4.