Cash flow from operations (CFO)

Definition

Cash flow from operations (CFO) in plain English

This is the actual cash a company brings in from doing its main job — selling its products or services — after paying the everyday costs of running that business. It matters because profit on paper can look great even when little real cash is coming in, and cash is what pays the bills and keeps the lights on. Think of a food truck: CFO is the money truly landing in the register from selling meals, minus what you spend on ingredients and staff — not counting one-off stuff like buying the truck or taking a loan.

Learn these first

• Cash ratio
• Days sales outstanding (DSO)

Related Principles of Finance terms

• Altman Z-score
• Asset turnover
• Basel III
• Cash conversion cycle
• Cash ratio
• Current ratio
• Days inventory outstanding (DIO)
• Days payable outstanding (DPO)
• Days sales outstanding (DSO)
• DuPont decomposition