Cash flow

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Under a cash flow [ kæʃ fləʊ (of] English cash flow , German cash flow , cash flow , cash flow or deposit excess ) is understood in the industry a financial ratio in the deposits and withdrawals within a certain period of time compared to each other ( offset ) are thereby statements to Enable internal financing or liquidity of an economic entity .


The Anglicism cash flow is a flow quantity that was developed in the USA . Mainly companies ( non-banks ) come into question as economic subjects , but the cash flow can also be determined in the case of private households and states (and their subdivisions), but of less informative value. A year ( fiscal year ) is usually used as the period , with external analysts determining the cash flow from the annual financial statements as a historical value; However, a cash flow forecast for liquidity planning is also possible for in-house analyzes . The discounted cash flow is such a future-oriented method for determining value in the context of a company valuation .


If you consider the cash flow as a pure income-expenditure calculation, the public budget developed by cameralistics can be seen as the origin of the cash flow calculation. Because the cameralistics is based on the mapping of payment flows that trigger an entry through cash-relevant income and expenses. The economist Georg Heinrich Zincke is considered to be the first to systematically and comprehensively explain cameralistics in 1742. According to him, the amount of court expenditures ( government expenditures ) would have to be “in view of the size of the country ... whose revenues [ government revenues , i. Ed.], Those of the many people necessary for this, who required raw and improved goods, "that is, with consideration for the country's resources . Budget deficits had to be compensated by state "Cammer-Aid" ( financial compensation).

The determination of the cash flow of stock corporations began in 1951 in the USA as a cash flow table ( English cash flow statement ) in the context of financial and stock analysis , especially for the key figure of the cash flow per share . In the same year the first financial movement balance appeared. In 1952, William J. Baumol developed a batch size concept for cash management that dealt with the prediction of cash flow ( English cash flow forecast ) as part of inventory management . From 1961 the American literature began with the "Cash flow Analysis" (CFA) as an instrument for external accounting . The simple cash flow calculation contained the list of liquid assets, while a second “funds flow calculation” examined the changes in working capital . The Accounting Principles Board introduced it in 1963 as the "Statement of Source and Application of Funds"; From 1971 it was called the "Statement of Changes in Financial Position". Since July 1988 it has been replaced by the “Statement of Cash Flows” as a compulsory component of external accounting for American companies; since 1992 it has also been regulated in the international accounting standard IFRS.

In Europe, the key figure for cash flow first appeared in 1959 in the annual report of Imperial Chemical Industries London. The first German publications had been published since 1952, when an author presented the “sales surplus” key figure, which is very similar to cash flow. Further important publications followed from 1962 and above all in 1963 by Günter Flohr and 1964. He criticized the consideration of the balance sheet profit in the cash flow because the balance sheet profit was tailored to the distributable dividend . In his opinion, only the profit carried forward could be included. It is therefore necessary that the possibility of using the cash flow for financing purposes is taken into account from the point of view of the time available.

The Business Administration discovered the cash flow only when the economic practice it had long been common. From 1965, the German balance sheet analysis took up this key figure. In the 8th edition of his basic work in 1980, the business economist Erich Gutenberg defined that the cash flow indicator indicates “how often the company would have to use its cash flow if it wanted to repay its long-term debts, or: how many years it would take to redeem his long-term debts from the cash flow ”. The term is included as “cash flow” in the current FEE Guide , in Germany it is officially referred to as “payment flow” , and France translated it as “flux de liquidités”. The DVFA took up the cash flow for the first time in 1982 and provided a uniform definition in the financial analysis.


A distinction can be made between:

  • Cash flow from operating activities (this includes operating cash flow),
  • Cash flow from investing activities and
  • Cash flow from financing activities.

The sum of these three balances gives the change in cash and cash equivalents for the period.

The operative cash flow is the result of all cash-effective business transactions in the ordinary course of business. In particular, the operative cash flow is used as an indicator for the internal financing potential of a company in the context of the annual financial statement analysis. A positive operating cash flow enables a company to properly repay loans or make new investments from the sales processes . Compared to the operating cash flow, which is based on normal business activities, the cash flow from ongoing business activities also includes, in particular, extraordinary payments and receipts.

Negative cash flow

The outflow of the cash flow from a company ( negative cash flow ) is known as cash loss or cash drain [ kæʃ dreɪn ]. The money has to be used for the operational business and is for example in inventories or receivables. Colloquially, a negative cash flow is also referred to as "burning money". In line with the term, there is what is known as the cash burn rate . This indicates either the time remaining or the speed with which the liquid funds will be used up.


The cash flow value can be determined both directly and indirectly. Both approaches must lead to the same result if uniform identification and delimitation criteria are applied.

Direct investigation

For direct determination, all cash-relevant expenses (e.g. material costs , wages / salaries , interest expenses , taxes ) of a period are subtracted from the cash-relevant income (e.g. sales , divestments , interest income , subsidies ). It should be noted that the change in the receivables portfolio is subtracted from the sales revenue at the end of each period, since the receivables generate sales but are not cash-effective. Cash is often referred to as a fund, as the payments affect the cash holdings or funds. The data is obtained from the income statement , provided that it is prepared using the total cost method. If the income statement is prepared using the cost of sales method, it is not possible to determine the cash flow directly - at least for the external analyst.

Indirect determination

For indirect determination (also known as the “practitioner method”), the balance sheet success , usually the annual net income after taxes, is used. Expenditure- neutral expenses (which have no effect on payment and are only offset items in the balance sheet), such as depreciation or an increase in provisions , are added together. In contrast, income- neutral income such as write-ups are subtracted. Spending-neutral and income-neutral are also referred to as non-cash and often also non-cash, as these movements have no effect on the cash holdings or funds.

For the external observer (especially in the context of the balance sheet analysis ) only the indirect cash flow determination can usually be used. There is no generally accepted method for indirect determination. To avoid method-related misunderstandings, it is recommended to publish the entire invoice. The German Association for Financial Analysis and Asset Management (DVFA) and the Schmalenbach Society for Business Administration (SG) also recommend a uniform form of calculation.

Financial business analysis

Company cash flows

To simplify matters, the company can be viewed as a system of payment flows. On the sales market, the company generates income from sales (E U ). In the factor markets, the company has to make payments for wages (A W ), materials (A M ) and investments (A I ). The total payment flows on the sales and procurement markets are also referred to as payment flows at the service level and the corresponding balance (E U - A W - A M - A I ) as the payment balance at the service level. The payment flows at the service level thus include all payment flows that arise in the context of the operational provision of services on the sales and factor markets. The tax payments to the state (A ST ) can be viewed separately, but they are usually also assigned to the benefit area.

In addition, the company has cash flows in the finance area. The finance area is assigned cash flows that arise for the company with its equity and debt providers. On the one hand, the company can generate payments by raising equity (E EK ) or debt capital (E FK ), on the other hand, investors are provided by distributions (A A ), interest (A Z ) and repayments (A T ). served.
The different cash flows can therefore be assigned to different sources. This illustration makes it clear that the following financing equation must be fulfilled in any sub-period:      

Funding equation

Performance balance

     (E U - A W - A M - A I )

=     Cash at the end of the period

    (L T )

+ Financial balance

     (E EK + E FK -A A -A Z -A T )

- Tender at the beginning of the period

    (L 0 )

- Tax payments

     (A ST )

The payment balances of the performance and financial level minus tax payments must be noticeable in each period in a corresponding change in the cash balance. For purposes of financial analysis, the basic equation is often viewed in a different form. The current balance before investment payments minus tax payments is called the balance of internal financing . The balance of internal financing indicates the extent to which a company is able to generate a cash surplus from its ongoing business activities. The funds supplied from outside within the framework of internal and external financing are referred to as external financing . With the help of these definitions, the company's cash flows can be broken down according to the origin and use of funds:

Source and use of funds
Source of funds = Use of funds
    Internal financing

    (E U - A W - A M - A ST )


    (A I )

+ External financing  

    (E EK + E FK )

+ Service of debt capital

    (A T + A Z )

+ Dissolution of liquidity reserves

    (L 0 - L T )

+ Distributions to owners

    (A A )

This illustration makes it clear that funds from internal and external financing as well as liquidity reserves can be used to make investments or to serve the lenders with interest and repayments (for debt) or distributions (for equity). It should be noted that negative financing balances can also arise or liquidity reserves can be built up. These balances are then to be interpreted as the use of funds and taken into account on the right-hand side of the equation.

The cash flows of the source of funds provide information

When preparing cash flow statements , this financing equation is viewed in a slightly different form. The internal financing balance is referred to as the cash flow from operating activities. External financing with equity and outside capital minus servicing the financiers with interest / repayments and distributions is combined into a cash flow from financing activities. The following equation results:

Cash flow statement
Source of funds = Use of funds

    Cash generated from operations

    (E U - A W - A M - A ST )

Cash flow from investing activities

    (A I )

+ Cash flow from financing activities

    (E EK + E FK - A T - A Z - A A )

+ Increase in liquidity reserves

    (L T - L 0 )

When analyzing the financial situation, special attention must be paid to the internal financing balance (cash flow from operating activities). A company can only survive in the long term if it can service borrowed capital and make investments from ongoing business operations. Otherwise a vicious circle threatens: The financing of interest / repayments or investments from the additional borrowing of debt results in higher payments for interest and repayments, which further limit the internal financing power. Ongoing financing with external equity is difficult in a tense financial situation. Liquidity reserves can also only be used to a limited extent (until they are used up) to finance payment obligations.

The direct investigation methods

  Ergebnis laut Gewinn- und Verlustrechnung
  + AbschreibungenZuschreibungen
  + Erhöhung Rückstellungen
  − Verminderung Rückstellungen
  + Verluste aus Anlagenabgang
  - Gewinne aus Anlagenabgang
  = traditioneller Cashflow
  + Verminderung der Forderungen, Vorräte usw.
  - Erhöhung der Forderungen, Vorräte usw. 
  + Erhöhung der Lieferverbindlichkeiten usw.
  - Verminderung der Lieferverbindlichkeiten usw.
  = (1) Cashflow aus Geschäftstätigkeit (operativer Cashflow)
  + Einzahlungen aus Anlageabgängen
  − Auszahlungen für Anlageinvestitionen
  = (2) Cashflow aus Investitionstätigkeit
  + Einzahlungen aus Zuführungen von Eigenkapital
  − Auszahlungen an die Gesellschafter
  + Einzahlungen aus Aufnahme von Finanzverbindlichkeiten
  − Auszahlungen aus Rückzahlung von Finanzverbindlichkeiten
  = (3) Cashflow aus Finanzierungstätigkeit

  Summe der Positionen (1), (2) und (3)
  + Finanzmittelbestand zu Beginn des Geschäftsjahres
  = (4) Finanzmittelbestand Geschäftsjahresende

Successful business analysis

The cash flow serves as a profit indicator in the business analysis. In its simplest form, gross cash flow is the total cash flow generated by the company. Since the cash flow can be used to repay debt and to build up reserves , further derived parameters must be determined in order to determine the amount of funds that are freely available for investments and dividend payments. To calculate the net cash flow and the free cash flow , expenditure-related expenses such as private withdrawals and investments are deducted from the cash flow after the balance sheet has been drawn up. In contrast, cash income that is generated after accounting ( e.g. disinvestment ) must be added up.

The indirect determination method

Gross cash flow

  + AbschreibungenZuschreibungen
  + Zunahme der langfristigen Rückstellungen (inklusive Pensionsrückstellungen)
  − Abnahme der langfristigen Rückstellungen (inklusive Pensionsrückstellungen)   
  = Brutto-Cashflow

Net cash flow

  − SteuernPrivatentnahmen bei Personengesellschaften
  + Rücklagenzuführung
  - Rücklagenauflösung
  = Netto-Cashflow (Cashflow bereinigt u. a. um Steuerzahlungen, Finanzierungskosten, Rücklagenveränderungen)

Which taxes are deducted depends on the underlying valuation method. In Germany, the discounted cash flow method (DCF method) is usually used. In accordance with the IDW standard S1, both company taxes and personal income tax of the entrepreneur are taken into account in the DCF procedure.

Free cash flow

  − Investitionen (aus Geschäftstätigkeit: Ersatz- und Erweiterungsinvestitionen) 
  + Desinvestitionen
  = Freier Cashflow (englisch Free Cashflow; Cashflow vor Dividenden und nach laufenden Investitionen)

The free cash flow is the freely available cash flow. It shows how much money is left for the dividends of the shareholders and / or for a repayment of the debt financing . For credit institutions, the extent of sustainable free cash flow is an indicator of the ability to repay loans and is therefore often used as a basis for calculating the debt service coverage ratio in creditworthiness checks .

The direct investigation method

  + Bestandszunahme Halb- und Fertigerzeugnisse	
  − Bestandsabnahme Halb- und Fertigerzeugnisse	
  − Materialaufwand der Periode	
  − Personalaufwand der Periode (abzüglich Pensionsrückstellungen)	
  − Fremdleistungsaufwand der Periode	
  − übriger Sachaufwand der Periode	
  − freiwillige Zuwendungen (aus dem Ergebnis)		
  = CFBIT (englisch Cash Flow Before Interest and Taxes)
  − KreditzinsenErtragsteuern	
  = Netto-Cashflow
  − Zunahme Debitorenbestand	
  − Bestandszunahme Roh-, Hilfs- und Betriebsstoffe	
  + Bestandsabnahme Roh-, Hilfs- und Betriebsstoffe	
  + Zunahme kurzfristige zinsfreie Schulden	
  + Kreditzinsen	
  − Investitionen ins Anlagevermögen	
  + Desinvestitionen des Anlagevermögens	
  = Free Cashflow

Cash flow statement in the annual financial statements

The company's financial position is presented in the annual financial statements by means of a cash flow statement.

Cash flow statement in the consolidated financial statements under commercial law

Group - parent company need to § 297 para 1 sentence 1. HGB in its consolidated financial statements publish a cash flow statement. The obligation to prepare a cash flow statement was only introduced in 1997 with the KonTraG for listed groups and in 2002 it was extended to all groups. Since the cash flow statement in the HGB is not explained, was the German Accounting Standards Committee of DRS 2 "Cash flow statement" adopted laying down rules for drawing up and publication that much at the respective to IAS ( IAS 7 ) and US GAAP ( SFAS 95 ) oriented.

In April 2014, the German Accounting Standard No. 21 ("DRS 21") was published. Companies that are obliged to prepare a cash flow statement for consolidated financial statements in accordance with the German Commercial Code must observe DRS 21. The DRS 21 replaces the previously applicable standards DRS 2, DRS 2-10 and DRS 2-20. The application of DRS 21 is mandatory for fiscal years beginning after December 31, 2014.

All companies that participate in the organized capital market of the EU must prepare consolidated financial statements in accordance with IAS / IFRS for fiscal years beginning after January 1, 2005 and thus also publish a cash flow statement in accordance with IAS 7 .

Cash flow statement according to IAS / IFRS and US-GAAP

The understanding, shaped by the Anglo-Saxon “Statements of Cash Flows”, also includes the company's investment and financing activities in the same way as net and free cash flow. The proposed cash flow statement, which also essentially follows DRS 2 or DRS 21, which applies to financial years beginning after December 31, 2014, is divided into three cash flows:

  • Cash flow from operating activities (also operating cash flow ): after correcting for funds generated or used in the short term ( working capital , including in particular inventories and short-term receivables),
  • Cash flow from investing activities : after correcting for the use of funds from investments and divestments and
  • Cash flow from financing activities : after correction for funds used for dividends, interest payments and loan repayments as well as funds received from capital increases and borrowing.

For details of the regulation according to IAS / IFRS see IAS 7 .

Comparability of cash flow data according to IFRS

According to a study by the HHL Leipzig Graduate School of Management from 2016, the comparability of company accounts according to IFRS may be limited. In particular, the scope for design and discretion granted by the IASB "with regard to the allocation of interest and dividends to the respective cash flow statements" has a considerable influence. The leeway can significantly influence the operating cash flow. In particular, the (non-) disclosure of interest paid can decide whether there is a positive or negative operating cash flow. The researchers identified several factors that play a role in classifying interest and dividends in cash flow reporting. These include

  • "Influence of national accounting practice,
  • Industry practices,
  • Profitability,
  • Existence of financial analysts,
  • Type of auditor,
  • Use of the data for internal control processes and
  • voluntary or mandatory application of IFRS. "

As a consequence, the cash flow reports and in particular the operative cash flow should not be unchecked "used as a basis for decisions [...]". Analysts should deal with the “composition of the individual subtotals” in the cash flow statement. This makes the actual corporate relationships visible.

Business aspects

The cash flows for determining the cash flow result from the annual financial statements, specifically from the profit and loss account. The cash flow is an important indicator for the assessment of the earnings position of a company, because it can be manipulated less than the annual net profit through accounting policy , since its calculation only includes cash items. This is because all expenses that did not result in expenses ( depreciation , additions to provisions and value adjustments ) and all income that did not result in income ( write-ups , dissolution of provisions and value adjustments) are not taken into account in the cash flow.

For the assessment of the capital structure and thus the indebtedness, especially in the case of industrial companies , the cash flow undoubtedly has a certain importance, despite its hypothetical character, especially in connection with other indicators. It enables statements to be made about liquidity, which can be used for investments, debt repayment or profit distribution. Important key figures based on the cash flow are the cash flow return on investment , cash flow at risk , the cash flow turnover rate and the level of debt .

Legal issues

In Germany , the cash flow has found its way into the German Commercial Code (HGB) as part of accounting . For example, Section 264 (1) of the German Commercial Code ( HGB ) requires the preparation of a cash flow statement for a capital market-oriented corporation ( Section 264d of the German Commercial Code; Aktiengesellschaft , Kommanditgesellschaft auf Aktien ) ; this also applies to the consolidated financial statements in accordance with Section 297 (1) of the German Commercial Code . The cash flow statement ( English cash flow statement is) International accordance with IFRS ( IAS 02.01 and IAS 07.01) an integral part of the financial statements. According to IAS 7.6, cash flows are “all inflows and outflows of cash and cash equivalents” (see cash and cash equivalents ).

See also


  • Roland Alter: Cashflow-Management , Schäffer-Poeschel Verlag, Stuttgart 2016, ISBN 3791034693
  • Matthias Amen: The cash flow statement , in: Klaus von Wysocki , among others (Hrsg.): Handbook of the annual financial statements (HdJ). Cologne: Verlag Dr. Otto Schmidt, Dept. IV / 3, 43rd supplement, March 2008, ISBN 3-504-35110-1 .
  • Matthias Amen: Preparation of cash flow accounts. 2nd Edition. R. Oldenbourg Verlag, Munich, Vienna 1998, ISBN 3-486-24730-1
  • Adolf G. Coenenberg , u. a .: Annual accounts and annual accounts analysis , 21st edition, Schäffer-Poeschel Verlag, Stuttgart 2009, ISBN 3791027700
  • Andreas Eiselt / Stefan Müller: Cash flow statement according to IFRS and DRS 21 , 2nd edition, Berlin 2014, Erich Schmidt Verlag, ISBN 3503157425
  • Peter Stöckli: Master's thesis The importance of Financial Ratios in order to support Management . Frauenfeld (CH), University of Wales, 2004
  • Günter Wöhe / Ulrich Döring: Introduction to general business administration , 22nd, revised edition, Verlag Franz Vahlen Munich 2005, ISBN 3800632543

Individual evidence

  1. ^ Georg Heinrich Zincke, Grund-Riß an introduction to those Cameral Sciences , 1742, p. 483 f.
  2. Holger Neubert, The operational financial flow and its presentation , in: Die Wirtschaftsprüfung, Issue 18, 1951, p. 422 ff.
  3. J. Nertinger, financial movement balance sheet, in: Der Wirtschaftsprüfer, 1951, pp. 103-104
  4. ^ William J. Baumol, The transaction demand for cash , in: The Quarterly Journal of Economics 66 (4), 1952, pp. 545-556
  5. ^ Perry Mason, Cash Flow Analysis , in: American Institute of Certified Public Accountants, 1961, pp. 1 ff.
  6. Götz Hohenstein, Cash Flow- Cash Management , 1990, p. 25
  7. Martin Zumbuehl, Financially strong and financially weak companies and banks at a glance , 2011, p. 18
  8. Rudolf Verhülsdonk, The representation of business management finance in the balance of movements , in: Der Betrieb, 1952, p. 22
  9. Max Boemle, business considerations on the “cash flow” term , in: Die Unternehmens, Jg. 16, 1962, p. 199 ff.
  10. Günter Flohr, The period balance sheet , 1963, p. 62
  11. ^ Günter Flohr, Die Cash Flow Analysis , in: Der Betrieb, Issue 21, 1964, pp. 705–711
  12. Stefan Behringer, Cash flow and company assessment , 2010, p. 60
  13. ^ Erich Gutenberg, Fundamentals of Business Administration , Volume 3: The Finances , 1980, p. 226
  14. Fédération des Experts Comptables Européens, Guide , 2001, p. 11
  15. IDW Standard S1, 2008, Section
  16. Jérôme Ortscheid, L'évaluation des dommages dans les arbitrages internationaux , 2001, p. 211
  17. DVFA, The cash flow in financial analysis , 1982, p. 1 ff.
  18. Adolf Coenenberg , Annual Accounts and Analysis of the Annual Accounts , 21st edition, 2009, p. 1078
  19. Peter Seppelfricke : company analyzes . Schäffer-Poeschel, 2019, ISBN 978-3-7910-4435-4 ( [accessed on January 3, 2020]).
  20. Andreas Bauer: DRS 21. (PDF; 565 kB) The new standard for the cash flow statement with special attention to the BilRUG. December 17, 2015, accessed March 30, 2016 .
  21. a b Henning Zülch / Stephanie Jana / Christian Kretzmann, Cash is King! Isn't it? On the comparability of cash flow data in Germany , in: Der Betrieb No. 07, 2016, pp. 361–366 ( online ).
  22. Hartmut Bieg / Heinz Kußmaul , Finanzwirtschaftlichelösungen , 2000, p. 260
  23. ^ Erich Gutenberg, Fundamentals of Business Administration , Volume 3: The Finances , 1980, p. 226