Quick Definition
The cash generated by the company from the sales of products and services.
Explanation of Cash Flow from Operations
Also called Operating Cash Flow, and listed on the Cash Flow Statement, Cash Flow from Operations is the amount of cash generated from the operating activities of the company. This is the cash recorded from the sales of products the company produces and/or the services the company provides.
Importance of Cash Flow from Operations
You may have heard of a companies with "Positive Cash Flow" or "Negative Cash Flow", and the Cash Flow from Operations should be the major factor to either. A positive cash flow is always a good sign and shows at the end of the day, the company is able to generate more cash than it spends. A negative cash flow is always bad, and no company can sustain a long-term negative cash flow without taking on more debt or dipping into its cash reserves.
