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Business Definition for: negative cash flow
Dictionary of Finance and Investment Terms
negative cash flow

situation in which a business spends more cash than it receives through earnings or other transactions in an accounting period.

See also cash flow
Dictionary of Business Terms
negative cash flow

situation in which a business spends more cash than it receives through earnings or other transactions in an accounting period.

Dictionary of Real Estate Terms
negative cash flow

situation in which a property owner must make an outlay of funds to operate a property.

Example: Baker acquires an apartment building with the first year income statement shown in Table 33. Baker must spend $5,000 to operate the building for the first year, because of a negative cash flow.
TABLE 33
NEGATIVE CASH FLOW
Potential gross income: $50,000
Vacancy loss - 5,000
Effective gross income $45,000
Operating expenses -30,000
Net operating income $15,000
Debt service -20,000
Negative cash flow before tax $5,000
Related Terms:
cash flow

  1. cash receipts minus cash disbursements from a given operation or asset for a given period. Cash flow and cash inflow are often used interchangeably.
  2. in capital budgeting, monetary value of the expected benefits and costs of a project. It may be in the form of cash savings in operating costs or the difference between additional dollars received and additional dollars paid out for a given period.
  3. cash basis net income. The procedures for converting an accrual basis net income amount to a cash basis net income figure are as follows:
    Accrual basis net income
    + Non-cash charges such as depreciation
    + or - Changes in accounts receivable, inventory, prepaid expenses,
    accounts payable, and accrued liabilities
    = Cash basis net income

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