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 cash flow formula .

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

Rumus cash flow

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

Here’s the cash flow formula that you must know:

1. Free Cash Flow

Free cash flow is the remaining cash flow of the company after deducting capital financing or also from operating costs. The formula for free 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 a company incurs to purchase business assets such as business equipment.

2. Net Cash Flow

Net cash flow or net cash flow is a financial statement that comes from the sum of the three components of 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. This operating activity cash flow formula 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 in the following article .

5. Funding Activities Cash Flow

Funds from this cash flow report can be obtained by the company from investor funds, payment of accounts payable to banks, and dividend sales. You can see an example of calculating funding cash flow here .

Funding activity cash flow = Funds in from the sale of shares – Funds out payments dividends or payments owed to the bank.

6. Cash Flow Forecast or  Cash Flow Forecast

Reporting from the Wave Apps article , you can calculate cash flow for the coming period to get a 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 Forecast = Initial Cash + Projected Cash Inflows – Projected Cash Flows Out.

A projected cash inflow is the amount of cash you expect to receive in a certain period of time for your company.

Projected cash outflows are payments or funds out of the company within a certain period of time.

Calculating a cash flow statement or cash flow can be done easier if you record every expense and incoming funds according to the amount of cash your company has. Making cash reports can also rely on accounting software that is already available, such as Jurnal by Mekari .

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

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