Thesis: Cash Flows

Sample Thesis Paper

In order to understand the ways in which companies manage and speed up their cash flows we need to understand the basic concept of cash flows. Cash flow is one of the most important factors which highlight the financial condition of a company. Though the objective of every business is same which is earning profits but in order to operate and manage the business on a day to day basis the cash flows play a very important role and every business needs to manage them properly. A steady stream of cash flows is necessary not only for the operational requirements of a business but the business may also require extra cash from time to time to take care of investments and payments of any long term liabilities (Stewart 1991).

Cash flow as the name suggests is the total amount of cash inflow and outflow during a specific period of time. Though this is a personal finance perspective of cash flows it is quite similar and applicable in small and large organisations. A company receives cash from various sources and pays cash for various obligations. The company may receive cash from selling goods or providing services, receiving amount due from credit customers and if there is an adverse shortage of cash the company may also sell off some of its noncurrent assets. The regular cash payments of a company consist of payments to suppliers, payroll allocation, operational expenses and any other liabilities which may arise out of business operations. The cash flow of a company is the total of outflows and inflows of cash in a business. The company requires cash to pay for various operational activities such as paying salaries, rent, bills and suppliers which are referred to as outflows. The company receives cash from various sources such as converting assets into cash, borrowing money, selling equity and selling products; this receipt of cash is termed as cash inflow. The total inflows and outflows are calculated to arrive at the cash flow of a company (Kapoor, Dlabay and Hughes 2004).

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