6 Easy Cash Flow Formulas You Must Know

Cash flow is a cash flow statement that contains the income and expenses of a company. After you know how to make cash flow. The next step is to calculate it, of course to calculate cash flow, you must know the formula cash flow.

In this article, you will learn the formula cash flow which you can use to create a cash flow statement. You can also see the formula for count three components cash flow in another DailySocial article!

Formula cash flow 

In the statement of cash flows or cash flow There are several formulas that must be considered, because to compile a report cash flow, you have to calculate the cost of income and expenses first.

Here's the formula cash flow what you must know:

1. FreeCash flow

Free cash flow is residual cash flow company after deducting capital financing or also from operating costs. free formula Cash flow is:

Free Cash Flow = Net Profit + Depreciation/Amortization – Changes in Working Capital – Capital Expenditures.

• Net income is obtained from the profits or losses of a company.
• Depreciation or depreciation is an expense used to reduce the value of an asset.
• Working capital or workload is the cost incurred by the company to run daily business, it can be in the form of rent expense, salary expense, or water and electricity expenses.
• Capital expenditures are costs that companies incur to purchase business assets such as business equipment.

2. Net Cash Flow

Net cash flow or netcash flow is a financial statement derived from the sum of the three components cash flow.

Net cash flow =Operating Cash Flow + Investment Cash Flow + Funding Cash Flow

3. Operating Activities Cash Flow 

Operational activity cash flow is a financial record of the amount of cash obtained by the company. The cash flow formula for operating activities can be done using two methods, namely the direct method and the indirect method.

• Direct method = Total revenue – COGS – Operating Expenses.
• Indirect method = Net Profit + Depreciation – Taxes – Changes in Working Capital.

Meanwhile, the formula for calculating net income is = Gross Profit – Operating Expenses. 

Gross profit = Net Sales – Cost of Goods Sold.

4. Cash Flow Investing Activities 

Cash investment activity costs are generated from income and investment expenditures by the company.

Investing activity cash =Investment Income – Investment Expenditure.

An example of an investment cash flow calculation, you can see it in following article.

5. Cash Flow Funding Activities 

Funds from reports cash flow This can be obtained by the company from investor funds, payment of accounts payable to the bank, and the sale of dividends. You can see an example of calculating funding cash flow HERE.

Funding activity cash flow = Incoming funds from the sale of shares – Funds out of dividend payments or debt payments to banks.

6. Cash Flow Forecasts or Estimated Cash Flow 

Quoted from the article WaveAppsCalculating cash flow for the coming period you can do to get the company's financial projections. It is also used to avoid negative cash flow. How to calculate the estimated cash flow is also very easy, here is the formula:

Cash Flow Forecasts = Initial Cash + Projected Cash Inflows – Projected Cash Outflows.

• A projected cash inflow is the amount of cash you expect to receive in a given period of your company.
• Projected cash outflows are payments or funds out of the company within a certain period of time.

Calculate cash flow statement or cash flow This can be done more easily if you record every expense and incoming funds according to the amount of cash your company has. Make a report cash can also rely on for mobile devices to report the available accounting such as Journal by Mekari.

Well, that was the formula cash flow that you must know to calculate the funds of a business. If you calculate it digitally, you can also use Microsoft Excel.