kassavirta

Kassavirta, or cash flow, is a measure of the net amount of cash and cash equivalents that flow into and out of a business during a specific period. It is a key indicator of liquidity and financial flexibility, reflecting a company’s ability to pay debts, cover operating expenses, and fund investments without relying solely on external financing. Kassavirta is reported in the cash flow statement and is distinct from accounting profit, which includes non-cash items.

The cash flow statement is divided into three sections. Cash flow from operating activities covers cash generated by the core business, such as receipts from customers and payments to suppliers and employees. Cash flow from investing activities includes cash used for capital expenditures, acquisitions, and other investments. Cash flow from financing activities reflects cash movements related to borrowing, repayment of debt, and issuances or repurchases of equity. The indirect method is commonly used for reporting operating cash flow, starting with net income and adjusting for non-cash items and changes in working capital. The direct method lists actual cash receipts and payments but is less frequently used.

Interpreting kassavirta involves assessing liquidity and risk. Positive operating cash flow indicates the business can sustain operations; persistent negative cash flow may signal liquidity problems, even if profitability exists. Related concepts include free cash flow (operating cash flow minus capital expenditures) and cash burn rate (how quickly cash reserves are depleted, often used for startups).

Overall, kassavirta provides insight into the cash-generating ability of a business and its capacity to finance growth and meet obligations.