<p>Cash flow refers to the movement of money into and out of a business or investment. It is a key metric in fundamental analysis, tracking the cash inflows and outflows over a specific period.</p>

<h2>How It Works</h2>
<p>Cash flow can be broken down into three main components:</p>
<ul>
  <li><strong>Operating Activities</strong>: Cash generated from day-to-day operations, such as sales revenue and cost savings.</li>
  <li><strong>Investing Activities</strong>: Cash spent on long-term assets like property, plant, and equipment, or received from selling these assets.</li>
  <li><strong>Financing Activities</strong>: Cash received from borrowing or issuing equity, and cash paid out for dividends or debt repayment.</li>
</ul>
<p>The net cash flow is the sum of these three components, providing a snapshot of a company's liquidity and financial health.</p>

<h2>Why It Matters</h2>
<p>Cash flow is crucial for businesses and investors alike. For businesses, it ensures they have enough liquidity to meet short-term obligations. For investors, it helps evaluate a company's ability to generate cash, pay dividends, and fund growth opportunities. For example, a company with strong cash flow may be better positioned to weather economic downturns or invest in new projects, making it a more attractive investment.</p>