Cash flow

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CDO Cash Flow Diagram - Simplified

Cash Flow is the movement of money into or out of a business, project, or financial product. It is usually measured during a specified period.

CONTENT : A - F , G - L , M - R , S - Z , See also , External links


Quotes are arranged alphabetically by author

A - F[edit]

  • Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life. The calculation of intrinsic value, though, is not so simple. As our definition suggests, intrinsic value is an estimate rather than a precise figure, and it is additionally an estimate that must be changed if interest rates move or forecasts of future cash flows are revised.
  • The fact is that one of the earliest lessons I learned in business was that balance sheets and income statements are fiction, cash flow is reality.
    • Chris Chocola, cited in: "Entrepreneurial Minds: Clarifying your expectations," in: Business Week, October 26, 2014.
  • Gambling is a kind of tax: a tax on stupidity. A tax on greed. Some money changes hands at random, but the net cash flow always goes one way - to the Government, to the casino operators, to the bookies, to the crime syndicates. If you ever do win, you won't have won against them. They'll still be getting their share. You'll have won against all the penniless losers, that's all.

G - L[edit]

  • 60 Minutes is the most successful television series of all time, measured by almost any standard, not the least being cash flow. One year, in fact, the profit generated by 60 Minutes was said to have been all the money made in prime time by the CBS Television Network. It has been honored for dozens of awards for outstanding television journalism.
    • In the Storm of the Eye: A Lifetime at CBS. Putnam Adult. 1987. p. 142. ISBN 978-0399132551. 
  • Focusing on cash flow is the best way to determine whether the proposed project is feasible.
    • John M. Kelly (1986). Managing cash flow, p. 144
  • The ability to accurately predict cash flow is the best, most universal, and most consistent standard for financial management across all nonprofit institutions, regardless of size and mission.
    • Richard S. Linzer, ‎Anna O. Linzer (2006). The Cash Flow Solution: The Nonprofit Board Member's Guide.

M - R[edit]

  • In a world of perfect capital markets there would be no association between firm level investing activities and internally generated cash flows. If a firm needed additional cash to finance an investment activity it would simply raise that cash from external capital markets. If the firm had excess cash beyond that needed to fund available positive NPV projects (including options on future investment) it would distribute free cash flow to external markets. Firms do not, however, operate in such a world. There are a variety of capital market frictions that impede the ability of management to raise cash from external capital markets. In addition, there are significant transaction costs associated with monitoring management to ensure that free cash flow is indeed distributed to external capital markets. In equilibrium, these capital market frictions can serve as a support for a positive association between firm investing activities and internally generated cash flow.
    • Scott Richardson, "Over-investment of free cash flow." Review of accounting studies 11.2-3 (2006): 159-189.

S - Z[edit]

  • From a more theoretical viewpoint, one can focus on the nexus between the present and the future. A financial instrument typically represents a property right to receive future cash flows. Such cash flows will, of course, come in the future – hence the economics of time must be understood. In many cases the flows are uncertain, hence the need for an approach to the economics of uncertainty. In addition, cash flows in the far future may depend on actions taken (or not taken) in the near future. This gives rise to the need for a theory of the economics of options (broadly construed). Finally, one needs information to estimate likely future outcomes, hence the requirement for an understanding of the economics of information. I define financial economics so that it embraces all four of these important, difficult, and fascinating aspects of economics.
    • William Sharpe’s February 1992 lecture at Trinity University: in: William Breit, ‎Barry T. Hirsch (2009). Lives of the Laureates: Twenty-three Nobel Economists. p. 172
  • The central question for positive financial economics is valuation – what is the value today of a set of future prospective cash flows? The central question for normative financial economics is the appropriate use of financial instruments in a world in which values are set wholly or partially in accord with the principles of positive financial economics.
    • William Sharpe’s February 1992 lecture at Trinity University: in: William Breit, ‎Barry T. Hirsch (2009). Lives of the Laureates: Twenty-three Nobel Economists. p. 172
  • Market valuations can differ substantially and persistently from the rational expectation of the present value of cash flows without leaving statistically discernible traces in the pattern of ex-post returns.
  • The three most dreaded words in the English language are 'negative cash flow'.
    • David Tang in: "Kate Moss interviews David Tang," at, 16 June 2011.
  • Money not spent on a luxury one considered even briefly is the equivalent of windfall income and should be spent accordingly.
  • Happiness is a Positive Cash Flow.
    • Unknown, mentioned in: Kiplinger's Personal Finance, Jan 1986. p. 48
    • Complete text: The International Association for Financial Planning, Trowbridge Equity Group, a syndicator of real estate deals, distributes bright blue bumper stickers reading, "Happiness is a Positive Cash Flow."...

External links[edit]

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