Problem:

Cash flow refers to the current period's cash inflows less cash outflows. As we have learned, cash flows are different from accounting/accrual income measures of performance. Cash flow measures recognize inflows when cash is received but not necessarily earned, and they recognize outflows when cash is paid.

MSF practitioners intuitively understand the meaning of the term cash flow; many interpret cash flow as the equivalent of "economic oxygen."

Required:

Question: What is the meaning of the term cash flow? Why is this term subject to confusion and misrepresentation?

Note: Please explain comprehensively and give step by step solution.