What does the term "cash flow" refer to?

The term "cash flow" refers specifically to the movement of cash into and out of a business over a specific period. It encompasses all cash transactions, including cash receipts from sales, collections from accounts receivable, and cash payments for expenses, purchases, and other obligations. Understanding cash flow is crucial for managing a company's liquidity, ensuring that it has enough cash on hand to meet its operational needs and fulfill its financial commitments.

In a business context, positive cash flow indicates that the company is generating more cash than it is using, which is essential for sustainable operations and growth. Conversely, negative cash flow could signal potential trouble, as it means the company is spending more cash than it is bringing in, potentially leading to liquidity issues.

The other options touch on aspects of a business's finances but do not accurately reflect the specific definition of cash flow. Total revenue, long-term profitability, and cash saved for investments are all important financial metrics but do not capture the dynamic nature of cash transactions as comprehensively as cash flow does.