How to Calculate Cash Flow
What is Cash Flow?
Cash flow is the net amount of cash moving into and out of a business or personal account during a period. Positive cash flow means more cash coming in than going out; negative cash flow means the opposite. Cash flow is distinct from profit — a profitable business can still fail if it runs out of cash.
Step-by-Step Guide
- 1List all cash inflows: revenue received, loans drawn, asset sales, investment proceeds
- 2List all cash outflows: expenses paid, loan repayments, capital expenditure, tax
- 3Net cash flow = Total inflows − Total outflows
- 4For personal finance: income − all expenses including savings contributions
Worked Examples
Input
Monthly income £4,000 · Expenses £3,200
Result
£800 positive cash flow
20% of income free for saving/investing
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