A:

Revenue is the money a company takes in from conducting its regular business operations. Cash flow refers to available cash on hand and may include other sources in addition to revenue from sales of goods and services. Both revenue and cash flow are used as indicators to help investors or analysts evaluate the financial health of a company, but revenue provides a measure of effectiveness in sales and marketing, whereas cash flow is more of a liquidity or money management indicator.

In accrual accounting, revenue is reported at the time a sales transaction takes place and may not necessarily represent cash in hand. Revenue eventually impacts cash flow figures but does not automatically have an immediate effect on them. Cash flow tracks actual cash in hand, cash that may not actually be collected until months after revenue is recorded in the company's financial ledgers.

Cash flow includes operational sales revenues and monetary sources beyond merely sales revenues. Companies often generate or obtain cash in a variety of ways that lie outside the conduct of their main business. These extra sources of money that figure into the calculation of cash flow, but are not normally considered part of operational revenue, include such things as financing and investing. Licensing agreements are another source of cash, one that may be included as ordinary revenue. The critical importance of cash flow lies in the ability for a company to remain functional; it must always have sufficient cash to meet short-term financial obligations.

Revenue should also be understood as a one-way inflow of money into a company, while cash flow represents inflows and outflows of money. Therefore, unlike revenue, cash flow has the possibility of being a negative number or value.

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