Cash flow Analysis is the technique that examines the actual movement of money (cash) inflow and outflow in an organization.
Cash flow analysis tracks how cash is received (inflows) and spent (outflows) during a specific period. It helps in understanding:
- Where the cash came from (operating activities, investing activities, financing activities)
- Where the cash was used
- The organization's ability to generate cash
- Liquidity position of the business
The other options represent different analysis techniques:
Horizontal analysis compares financial data across multiple time periods to identify changes and growth patterns.
Vertical analysis expresses each item in a financial statement as a percentage of a base figure within the same statement.
Trend analysis examines financial data over several periods to identify long-term patterns or trends.
Since the question specifically mentions "actual movement of money inflow and outflow," it directly refers to Cash flow Analysis.