Question

can the cash balance be less than net cash flow for first year when this happens?

Answer 1

Net Cash flow simply refers to the difference between a company's cash inflows and outflows in a given period.In other words it refers to the change in the cash balance from one period to the next period .All these are detailed in cash flow statement.Therefore the net cash flow is the ending balance of a cash flow statement and will always be equal to cash balance with the company.When speaking about the net cash flow for the first year,this means that the company has little or no revenue.Any cash balance that comes is typically from the startup capital injected,revenue from sales and outflow would be a result of certain expenses.Now the net cash flow can be positive or negative.If inflows are more than the outflow it would be considered as a positive cash flow and it will be equal to the cash balance at the year end.However if the cash outflow is more than the cash inflow it will be a negative cash flow which means that there is no cash balance with the company at the year end as it is  is not able to generate cash inflows for meeting out the outflows and expenses of the same period.In any case whether it is a positive cash flow or a negative cash flow ,the cash balance will not be less that the net cash flow.The cash balance will either be zero or equal to the net cash flow.