Cash Flow Analysis is a financial tool used to assess the inflow and outflow of cash within a business over a specific period. It helps identify how well a company generates cash to meet its obligations, such as paying bills, salaries, and investments. By tracking cash movements, businesses can make informed decisions about spending and saving. This analysis typically involves reviewing cash flow statements, which categorize cash flows into three main activities: operating, investing, and financing. Understanding these categories allows businesses to pinpoint areas of strength and weakness, ensuring they maintain sufficient liquidity to operate effectively.