This being said, to calculate cash flow in this way, you’ll use the following formula:Ĭash from operating activities +(-) C ash from investing activities +(-) C ash from financing activities + B eginning cash balance = E nding cash balance The cash flow statement shows the flow of cash into and out of your business during a specific period of time and is one of the three core financial statements within business accounting. Below, we’ll explain how to calculate cash flow in four different ways: How to Calculate Cash Flow With a Cash Flow Statementįirst, let’s discuss how to calculate cash flow in the most common way-through a cash flow statement, also called a statement of cash flows. This being said, however, there are actually multiple ways to calculate cash flow-depending on what type of analysis you’re looking to perform and the specific cash flow formula you use. In this way, performing a cash flow analysis can give you a better idea of your business’s liquidity, flexibility, and overall financial performance. It’s easiest to think of cash flow as the net amount of cash moving into and out of a business at any given time. In this guide, we’ll explain four formulas that can be used to calculate cash flow, how they work, and how you can use each result to inform your business’s financial decisions. Knowing how to calculate cash flow can be useful if you’re managing your finances through a spreadsheet program, like Excel, or simply to give you a better sense of what goes into the automation of your accounting software-especially since calculating your cash flow can show where your business stands financially and give insight into what it needs to do to grow. However, even if you do use a software platform, it’s still important to understand how to calculate some of the most significant metrics that serve as a measure of your business’s health-like cash flow. Luckily, if you use an automated accounting or bookkeeping software, pulling reports and making financial calculations are relatively simple. When it comes to your business accounting, there are a number of different formulas and statements you can use to evaluate your financial health. Discounted cash flow (DCF) = Sum of cash flow in period ÷ (1 + Discount rate) ^ Period number.Operating cash flow = Net income + Non-cash expenses – Increases in working capital.Cash flow forecast = Beginning cash + Projected inflows – Projected outflows.Cash flow = Cash from operating activities +(-) Cash from investing activities + Cash from financing activities.How to Calculate Cash Flow: 4 Formulas to Use
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