Cash Flow
Cash flow is crucial for any business to meet its expenses, such as stock, raw materials, rent, and other operational costs. Ensuring there is enough cash to cover these expenses is vital for the smooth running of the business. Accurate financial records help in better managing cash flow by tracking money coming in and going out, ensuring that bills and expenses are paid on time.
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For investors and creditors, cash flow is an important indicator of a company’s financial health, as it shows how much cash the business generates. This insight helps them evaluate the company’s ability to meet financial obligations, pay dividends, or grow the business. Proper cash flow management strengthens the business’s financial standing and increases its credibility with stakeholders.