Question

Create an example of a situation where there is a negative cash flow.

Answer 1

Negative cash flow does not necessarily means loss, and may be due only to a mismatch of expenditure and income.If there is any company that has to pay a bill but is not able to pay the bills and has to borrow then this is a case of negative cash flow.It means the company is spending more than it is earning.Companies take loan to fulfill negative cash flow.

For example : Company A has to pay $20000 as labor charges and has only $10879 in its account. We say the company has negative cash flow.

Answer 2

when say your expenses are $400 a month but your income is only $350 a month that is -$50 every month so in that case you aren't getting a positive cash flow (which would be making more money than your expenses) So you must be getting a negative cash flow in which you are losing money and going into debt.