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What is Capital Cash Flow

What is Capital Cash Flow

The cash flow of capital, also known as capital cash flow is the amount that one company in particular generated in a given period of time (which is called exercise) and is intended for payment of its creditors and owners Actions.

By creating the cash flow of capital, mercantile companies are responsible for paying those individuals or societies that participate in their economic life in the role of owners or investors or holders of debt.

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During an exercise the company has faced its corresponding obligations and finally has managed to raise a sum of money that can destine to its shareholders and creditors, who participate vitally in the existence of the same and in exchange opt for this type of reimbursement, either in consideration To your share of the company’s property (ie, investment in it) or to have intervened through funds or some type of loan .

When we talk about payments directed to shareholders of the company, we speak of amounts of money that leave the company towards them after having fulfilled the corresponding obligations of the company and other expenses of its activity (purchases, financing ). As for payments to creditors, outgoing amounts are directed to meeting prior commitments and their related interests.

Therefore, we would be talking about a set of payments made to every shareholder and every creditor at the end of an economic period. In that sense, it could be considered the capital cash flow as a form of cash flow in its financial arrangement, given the definition of that type.

The main difference between capital cash flow between shareholders and creditors is that the former are sent returns as a result of a previous investment, as mentioned above, and creditors do have their funds returned periodically with a certain amount derived from the interest of this type of debt.

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Salman Qureshi

Salman Qureshi is an Accountant by profession & he loves to write on Commerce & Management Sciences Subject to assist Students. Hope you guys will like his effort.

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