How to Calculate Cash Flow and Examples

As an entrepreneur or you who are going to enter the business world, of course finances or financial matters are the most important things for you to pay attention to. When you open this article, you hope to get a discussion on how to calculate cash flow for your efforts.

Cash flow or cash flow This is one thing that is important for company projections. Through this article you will know how to calculate cash flow easily and at the same time.

How to calculate cash flow

Previously maybe you already know what it is cash flow. Several DailySocial articles have discussed about cash flow. Cash flow is a report related to the entry and exit of a company's money or personal money.

To count netcash flow is to use the following formula:

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

The formula is a formula for calculating net cash by adding three components cash flow. Meanwhile, the three components must also perform calculations in advance with the formulas that are already available.

1. Calculating operating activity cash flow

Operational cash flow comes from sales, namely the amount of cash obtained, employee salaries, rental expenses, depreciation, or settlement of receivables.

The formula is Operating costs + interest earned/ cash inflows - taxes + working capital expenses

For example, a mobile company in the January 2022 period received product sales of Rp. 8.000.000, then earned interest from receivables of Rp. 2.000.000. Then, paid rent tax of Rp. 1.000.000 and paid employee salaries of Rp. 3.000.000.-

Then these numbers can be entered into a formula like the following:

(8.000.000 + 2.000.000) - (1.000.000 + 3.000.000) = 10.000.000 - 4.000.000 = 6.000.000.-

The cash flow from the operating activities of the moving company in the period January 2022 was Rp6.000.000.-

2. Calculating the cash flow of investing activities 

Cash investment activity costs generally come from income and expenses from investments generated by the company. The investment cash formula also simply adds up the income from all investments and subtracts it from the investment expenses made by the company.

For example, a motion company obtains funds from the sale of bonds amounting to Rp.4.500.00 and funds from the sale of assets of Rp.6.000.000. Then the company also bought an investment property for Rp. 2.000.000.-

The funds can be entered into the formula below,

Investing activity cash flow =  investment income - investment expenditure

For the case of a mobile company, the calculation is as follows, (6.000.000 + 4.500.000) - 2.000.000 = 10.500.000 - 2.000.000 = 8.500.000.- 

The cash flow of the Moving Company's investing activities is Rp. 8.500.000.-

3. Calculating the cash flow of financing activities

Calculating the cash flow of funding activities is by adding cash inflows from investor funds, selling shares minus cash outflows such as paying off debt to banks and buying dividends.

Using the example of a mobile company that received funds from investors of Rp. 15.000.000 and the sale of shares reached Rp. 10.000.000. Then, pay off the debt to the bank in the amount of Rp. 20.000.000.- 

The way to calculate it is (10.000.000 + 15.000.000) - 20.000.000 = 25.000.000 - 20.000.000 = 5.000.000.-

The mobile company's cash flow from financing activities is Rp.5.000.000. After knowing the total cost of the three components cash flow, then you can go straight to the calculation netcash flow or net cash flow.

From the example of a mobile company above, netcash flow January 2022 period is as follows:

• Cash flow from operating activities Rp6.000.000
• Investing activity cash flow IDR 8.500.000
• Cash flow from financing activities Rp5.000.000

You can directly add them up to be included in the formula

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

6.000.000 + 8.500.000 + 5.000.000 = 19.500.000.-

net cash flow Motion Company for January 2022 period is Rp19.500.-

Well, that's how to calculate cash flow especially netcash flow. So, before you calculate a company's net cash flow, you have to put together three main components cash flow.

You can count cash flow with the help of Excel or you can also use the services financially practical. There are many and financial applications cash flow which you can download at smartphone or PC and of course how to calculate cash flow-it will be much easier.