What is cash flow and why is it important for a business or individual?

Cash flow refers to the amount of money that flows in and out of a business or individual's accounts over a specific period of time. It is important because it reflects the ability of the business or individual to meet its financial obligations, such as paying bills, making investments, and managing debt.

In the context of a business, cash flow management is critical for ensuring that the business can cover its operating expenses and make investments in growth opportunities. Without proper cash flow management, a business may struggle to pay suppliers, employees, or creditors on time, which can ultimately lead to financial distress and potentially bankruptcy.

For individuals, cash flow is important because it reflects the amount of money they have available to cover expenses and save for the future. Positive cash flow allows individuals to invest in opportunities that can increase their wealth over time, while negative cash flow can lead to debt and financial hardship.