negative cash flow

Negative cash flow

Occurs when spending in a business is greater than earnings.

Negative Cash Flow

A situation in which a company is spending more money than it is receiving. While this is common in many companies, especially in the first year or two of operation, it is obviously unsustainable in the long-term. A company with a negative cash flow often has to resort to loans or equity financing in order to keep its doors open.

negative cash flow

Having insufficient cash to pay all operating expenses of a business or an investment.The situation is common with new developments and is solved by the developer using its own money to help pay bills or, more often, by borrowing enough money in the development loan to cover cash shortfalls until the project reaches stabilized occupancy and the break-even point.
References in periodicals archive ?
The archdiocese is estimating a negative cash flow of $40 million by the end of 2005.
Depending on the current cash flow from the property, this could result in a negative cash flow.
MGM executives said they expected to experience negative cash flow during the third quarter due to concentrated releasing costs of five coming theatrical releases, including ``Jeepers Creepers 2'' and ``Uptown Girls.
For example, there will be significant negative cash flow in the early months of fill-up for your new project, as most of your costs are fixed; only about 25 percent of your operating expenses are variable.
The Irvine store incurred operating losses and negative cash flow from opening in November 1995 to the date of closure.
Thompson, the Company's CFO said, "I am obviously pleased with the earnings improvement in 2006, but more impressively with the positive cash flow provided from operations of $2,206,000, compared to last year's negative cash flow, or cash used in operations of $365,000, which is a swing of $2,571,000.
By taking whatever they are taking puts us in a negative cash flow situation,'' he said.
Because all of the units in the block are occupied by rent regulated tenants, the block has a negative cash flow of $20,000 per year.
However, to achieve this success model, you will need significant dollars in your capital budget to fund a sophisticated sales and marketing program and to cover some substantial negative cash flow during the critical fill-up period:
From yearend 1996 to June 30, 1999, those companies with positive cash flow registered a median return of 11 percent compared with a negative 17 percent for the negative cash flow group.
Zenith's rating reflects negative cash flow and chronically weak to negative debt protection measures, which are due to losses over six consecutive years.
Free cash flow in 2007 could be negative due to the downturn, continued competitive pricing pressures and high commodity costs, but liquidity remains adequate to finance modest negative cash flow prior to an anticipated rebound in end-demand.