What does cash flow refer to in a micro-enterprise?

Cash flow refers specifically to the movement of money into and out of a business. It is a crucial aspect of financial management for any micro-enterprise as it indicates the liquidity of the business, allowing it to assess its ability to cover expenses, pay debts, and reinvest in operations.

Understanding cash flow goes beyond just looking at profits or revenues. While profits indicate how much money remains after expenses have been deducted from revenues, cash flow includes all transactions involving cash, providing a clearer picture of a business's financial health. For instance, a business can be profitable yet still struggle with cash flow if its cash inflows (like money from sales) are not timely, causing challenges in meeting immediate financial obligations.

By focusing on cash flow, micro-enterprises can make informed decisions about spending, saving, and investing, which are vital for sustaining and growing the business. Thus, option B accurately captures the essence of cash flow in the context of a micro-enterprise.