Cash Flow
Summarize cash flows by activity. Formula: Net change = Operating + Investing + Financing. Use this calculator to reconcile cash movement across operating, investing, and financing activities. Enter beginning cash and each activity’s cash flows to see net change and ending cash.
What is cash flow?
Cash flow tracks money moving in and out of the business across operating, investing, and financing activities. It reveals liquidity and the ability to fund operations without new capital.
Why it matters
- Shows whether growth is self‑funded or reliant on external financing.
- Highlights working capital needs and timing mismatches.
- Complements profitability metrics with real cash movement.
How to calculate
Net change = Operating + Investing + Financing. Ending cash = Beginning cash + Net change.
Example
Operating $25,000.00, Investing -$10,000.00, Financing $0.00 ⇒ Net change $15,000.00 and Ending cash $115,000.00.
Common pitfalls
- Confusing profitability with cash flow; revenue recognition differs from cash timing.
- Ignoring deferred revenue and payables/receivables swings.
- Not separating one‑time financing activities from recurring operations.
FAQ
Is positive operating cash flow required to be healthy? It’s a strong signal but early growth may be investing in acquisition.
How often should cash flow be reviewed? Monthly management reporting and quarterly board reviews are common.
How does cash flow relate to runway? Persistent negative operating cash flow increases burn and shortens runway.