Velocity
Velocity in economics refers to how quickly money is exchanged within an economy. It is a measure of how many times a unit of currency is spent in a given period of time. The formula for velocity is:
Velocity = Gross Domestic Product (GDP) / Money Supply
Cash Flow
Cash flow is the net amount of cash and cash equivalents being transferred into and out of a business. It is an important indicator of a company’s financial health and can help determine its ability to meet its financial obligations. Positive cash flow indicates that a company’s liquid assets are increasing, while negative cash flow indicates that they are decreasing.
Examples
- A company with a high velocity of money is likely to have a strong economy, as money is circulating quickly and driving economic activity.
- If a business has a positive cash flow, it means that it is generating more cash than it is spending, allowing it to invest in growth opportunities or pay off debts.
For more information on velocity and cash flow, you can visit the Wikipedia page.