Cash flow is the actual cash moving in and out of a business. It shows how much money a company really makes, not just what it reports on paper.
Think of it like in-game currency. Profits are the score, but cash flow is the spendable gold you can actually use to upgrade, repair, or survive the next level.
Cash flow reveals financial health. Companies with strong cash flow can pay bills, invest in growth, reduce debt, or return money to shareholders without relying on borrowing.
Unlike accounting profits, cash flow is harder to fake. That’s why investors often use it to assess risk, sustainability, and long-term business strength, especially during uncertain markets.
Cash flow is typically broken into three parts:
- Operating cash flow: cash from core business activities
- Investing cash flow: cash used for or generated from investments
- Financing cash flow: cash from debt, equity, or payouts
Positive and growing operating cash flow is usually a strong signal, especially when compared with earnings and revenue.
A common mistake is focusing only on profits while ignoring cash flow. A company can look profitable but still struggle to pay its bills.
Another error is judging cash flow without context. One-time investments or timing effects can distort short-term numbers, so trends matter more than a single period.
On Stoxcraft, cash flow appears on stock pages and in financial breakdowns that highlight company health.
It also feeds into portfolio insights and our Health Score, where cash flow helps assess business quality, financial stability, and long-term resilience alongside other key metrics.
