Cambridge O Level Business Studies · Syllabus 7115 · Financial Information and Decisions
Net Cash Flow
What is Net Cash Flow?
The difference between the total cash a business receives in a period and the total cash it pays out in that same period. A positive net cash flow means more cash came in than went out; a negative net cash flow means the reverse. Net cash flow added to the opening balance gives the closing balance, so a negative net cash flow still leaves a positive closing balance whenever the opening balance was larger than the deficit.
This definition is part of the Financial Information and Decisions chapter in Cambridge O Level Business Studies.
Common mistakes with Net Cash Flow
- “Negative net cash flow means the business has run out of money.” Fix Negative net cash flow only means more cash left than came in that period. If the opening balance was large enough, the closing balance is still positive. Always read the closing balance, not the net figure alone.
Questions students ask about Net Cash Flow
Does negative net cash flow mean a business has run out of money?
Not necessarily. Negative net cash flow only means more cash left the business than came in during that period. If the opening balance was large enough, the closing balance carried into the next period can still be positive. Always read the closing balance itself, not just the net cash flow figure on its own.