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Cash Flow Analysis in Financial Management - Interview Question Answer

In finance, cash flow analysis is a crucial tool used to assess the inflow and outflow of cash within a business. It involves tracking the movement of cash through various activities such as operating, investing, and financing.

Understanding cash flow analysis is essential in financial management as it helps businesses evaluate their liquidity, solvency, and overall financial health. By analyzing cash flows, organizations can identify potential cash shortages, plan for future investments, and make informed decisions to improve their financial performance.

Overall, cash flow analysis plays a vital role in effective financial management by providing valuable insights into a company's cash position and helping management make well-informed strategic decisions.

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