Net cash flow may not provide a complete picture of a company's financial health. While it’s a helpful metric, it has several limitations that should be considered when interpreting the data:
Net cash flow does not consider the timing of cash inflows and outflows, making it difficult to compare companies with different fiscal years or accounting periods.
A positive net cash flow may result from a loan’s cash payments, which means it also reflects a debt. Similarly, a negative cash flow could reflect investments that are expected to pay off in the future.
Despite these limitations, net cash flow remains a valuable metric for assessing a company's financial health. When used in conjunction with other financial measures, it can provide crucial insight into your business’s overall financial performance.