Cash Flow Calculator
Turns profit into cash by adjusting for non-cash items and working capital.
Share sends a link that reopens these numbers. Copy details pastes the full breakdown as a list.
The formula
operating cash flow = net income + non-cash items − increase in receivables − increase in inventory + increase in payables free cash flow = operating cash flow − capital expenditure
Start with profit, add back costs that used no cash, then adjust for cash tied up in or released from working capital.
What to watch out for
This is the indirect method in simple form. The changes in receivables, inventory and payables are the end of the period less the start, taken from two balance sheets.
Frequently Asked Questions
How do I calculate operating cash flow?
Start from net income, add non-cash costs, then adjust for working capital. 50,000 + 15,000 − 8,000 − 4,000 + 6,000 = 59,000.
What is free cash flow?
Operating cash flow less capital expenditure: what is left after keeping and adding to the business’s assets. 59,000 − 20,000 = 39,000.
Why does an increase in receivables reduce cash flow?
Profit counted those sales, but the customers have not paid yet, so the cash has not arrived. Stock works the same way, since you have paid for goods not yet sold. A rise in payables does the opposite, because you have had the goods and not yet paid.