What is multiple cash flow?
Category:
personal finance
financial planning
Key Points. The FV of multiple cash flows is the sum of the FV of each cash flow. To sum the FV of each cash flow, each must be calculated to the same point in the future. If the multiple cash flows are a fixed size, occur at regular intervals, and earn a constant interest rate, it is an annuity.
Also, what are the different kinds of multiple cash flows we can have?
Let's start with the three types of cash flow in the cash flow statement:
- Cash Flow From Operations.
- Cash Flow From Investing Activities.
- Cash Flow From Financing Activities.
In this manner, can you compare or combine cash flows at different times?
No, you cannot compare or combine cash flows at different times. A dollar today and dollar in one year are not equivalent. To move a cash flow forward in time, you must compound it. To move a cash flow back in time, you must discount it.
Total cash flow is simply the net amount of all cash flowing in and out of your business, from all sources. If you have $350,000 worth of cash coming in each year as revenue and other income and $300,000 going out for expenses and capital investment, then your total cash flow is $50,000.