Importance of Cash Flows

Any business that has a difficult time creating cash flows, either right now or in the future, should be regarded as a red flag. It shows investors that either the company is struggling in its industry, or there is very poor management at the company. Either way, investors should avoid companies like that. There are plenty of companies that do not have problems creating cash flows, and even consistently pay out dividends to its shareholders (cash outflow) without hurting its business. Those companies are the ones worth investing