Cash Flow Test
/ˈkæʃ floʊ tɛst/
Definitions
- (n.) A financial analysis to determine whether an entity's cash inflows exceed its cash outflows, often used to assess solvency or ability to pay debts.
The court applied the cash flow test to evaluate if the company could meet its liabilities as they became due.
Forms
- cash flow test
- cash flow tests
Related terms
See also
Commentary
The cash flow test focuses on actual cash movement rather than accounting profits, making it key in insolvency assessments and creditor protection.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.