Cash flow analysis is the analysis of a company’s cash flow - cash in and cash out - over a specific period of time. It typically looks at the difference between cash at the beginning of the period and compares it to cash at the end of a period. Ideally, the cash flowing in will be greater than cash going out. Cash flow analysis is essentially a health check performed by finance in order to ensure that all expenditures are accounted for, leaks are identified, and free cash is actually free. Cash flow analysis gives insight into short-term and long term financial viability of a company by projecting the cash flow statements into the future over varying time periods. 

Key to cash flow analysis, finance uses the cash flow statement, the balance sheet and income statement to analyze cash flows and assess liquidity, viability and solvency using the following ratios:

  • Operating cash flow ratio
  • Dividend pay out
  • Price/cash flow ratio
  • Cash flow margin ratio
  • Asset efficiency ratio
  • Average total liabilities
  • Long term debt coverage ratio
  • Interest coverage ratio
  • Current ratio
  • Quick ratio
  • Current liability coverage
  • Earnings Quality
  • Capital asset ratio
  • Cash generating power
  • External Financing Index Ratio.
Discover how CCH Tagetik Performance Management Software delivers:
Cash Flow Analysis
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