What does the term "cumulative cash flows" refer to in finance?

The term "cumulative cash flows" refers to the total cash flow over multiple periods, which means it adds together all cash inflows and outflows up to a specific point in time. This aggregate measurement is essential in finance as it allows stakeholders to assess the overall financial performance of a project or investment. By tracking cumulative cash flows, investors can see how cash is generated or consumed over a series of periods, providing a clearer picture of the financial health and cash management of an entity or initiative. This perspective is crucial for evaluating long-term viability and profitability, as it helps to determine whether cash inflows can support ongoing expenses and produce profit over time.