Annual Cash Flow Calculator

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  • February 7, 2020 Updated
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All businesses want to operate in the black. As a business owner, however, you know you can’t just hope that you’re doing well financially. Doing well financially, rather, takes planning and strategy and information.

The planning and strategy we can’t help you with, but the information we can. Our annual cash flow calculator will enable you to analyze the money coming in and going out of your business. This will allow you to assess what’s going well and what needs to be addressed.

As you record your cash inflows and cash outflows, you are actually creating your cash flow statement. This includes information about your operating activities, investments, and financing. When analyzed as a whole, this information helps you to see if your business has enough cash on hand to pay for its expenses and to purchase additional assets. This information can help you measure the financial strength of your business.

What Is an Annual Cash Flow Calculator?

An annual cash flow calculator is a tool to help you calculate the cash flow of your business. You enter data about your operations, finances, and investments. Then, the calculations are automatically done for you and you can quickly determine your net cash flow.

Our annual cash flow calculator is in Microsoft Excel, and is able to calculate your net cash flow for a twelve-month period.

Template Contents

When you download this file, you will receive a customizable Annual Cash Flow Calculator template. It looks like this:

Annual Cash Flow Calculator Contents

How to Use the Annual Cash Flow Calculator Template

Once you open the template, you can begin customizing it for your own use. You can change the company name at the top.

To change the year, click on the word “January” in cell B6. In the formula bar, you will see the date entered 1/1/19. Simply replace 19 with the last two digits of the current year.

Annual Cash Flow Calculator Change Dates

Not every business operates on a calendar year. If you need to change the month headings to reflect your fiscal year, you can do that in cell B6 as well. Change the 1/1/19 to reflect the month and year you want to begin with. The remaining months will automatically adjust.

Since this cash flow statement shows your beginning and ending cash balances for each month, there is one more task to do before you begin entering cash flow data, which is to record your beginning cash balance for the first month. Scroll down to cell B43 “beginning cash balance.” The template’s default sets this at 0. Simply replace this number with your beginning cash balance amount. You will notice that it will automatically fill in all the other cells. These numbers will also update and correct themselves as you enter information about your cash inflows and outflows into the template.

Annual Cash Flow Calculator Cash Balance

Three Categories of Cash Flow

Now that you have customized your template, you can enter your data. You will notice that the cash flow calculator is divided into three different sections. Each of these sections represents one of the three categories of cash flow: operating, investing, and financing.  Under each section you will find two parts. The first part is for recording cash inflows. The second is for recording cash outflows.

When you record the data for each row in the appropriate month, the calculations will be done automatically. The rows are labeled with common cash flow items for many businesses, but feel free to insert more rows or remove ones you don’t need. You can also change the wording to reflect your own terminology.

Operating Cash Flow

In the operating cash flow section, you will record the cash inflows and outflows for your business operations. For cash in, there are rows to record your:

  • Net Sales Revenue and
  • Other Operating Income.

In the cash out section, you can record your business:

  • Payments to Suppliers,
  • Wages,
  • General and Administrative Expenses,
  • Interest Expense, and
  • Tax Expense.

Investing Cash Flow

Cash flow from investing activities represents money used in or generated by investments. This includes the purchase or sale of long-term assets or property, loan collections, and lending money.

For cash in, you can record:

  • Sale of Property, Plant, and Equipment,
  • Loan Collections,
  • Sale of Investment Securities, and
  • Other Investment Income.

In the cash out section, you can enter:

  • Purchase of Property, Plant and Equipment,
  • Lending,
  • Purchase of Investment Securities, and
  • Other Investment Payments.

Financing Cash Flow

Cash flow from financing activities refers to cash used to fund the company. Debt, equity, and dividends are recorded in this section.

For the cash in section, you can document:

  • Issuance of Stock and
  • Issuance of Debt.

In the cash out section, you can note:

  • Repurchase of Stock,
  • Repayment of Debt, and
  • Dividends and Distributions.

Net Cash Flow

For each of the three categories, you can find your net cash flow for that particular section. This total is calculated by adding the cash in and subtracting the cash out.

Annual Cash Flow Calculator Net

At the bottom of the template, you can find your total net cash flow. You will see a total for each month, and if you scroll over to column N, there is an annual total.

Annual Cash Flow Calculator Total Net

What Is Net Cash Flow?

Net cash flow is a calculation of your company’s cash inflows and outflows during a specific period. It shows the change in your cash during this time.

Net cash flow is the sum of cash flow from all three categories; operating, investing, and financing. You add each of these up to arrive at your net cash flow.

You can also have a negative cash flow, which happens when you spend more cash than you bring in. Common causes of negative net cash flow are expanding operations and purchasing long-term assets.

FAQs

Here are answers to frequently asked questions about calculating cash flow.

What Are the Types of Cash Flow?

There are three types of cash flow:

  • Operating Cash Flow
  • Free Cash Flow
  • Discounted Cash Flow

Here is more information about each:

Operating Cash Flow

Operating cash flow measures how much cash a company generated through its normal operations. This value tells you if the company has enough cash flow to maintain its current expenses. By looking at your operating cash flow, you can see if you need to pursue additional financing to engage in expansion, or if you have the cash to do it on your own.

Free Cash Flow

Free cash flow (FCF) is a company’s cash from operations minus itscapital expenditures. It’s the cash that is available to be used in a discretionary way.

Discounted Cash Flow

Discounted cash flow (DCF) estimates what an asset is worth today using projected cash flows. The DCF model is one method of determining if a potential investment is worthwhile.

The discounted cash flow is more complicated to calculate than the operating cash flow or free cash flow. This particular Excel template is not set up to help you calculate the discounted cash flow. This article Guide to the Discounted Cash Flow DCF Formula goes into more detail about the DCF formula.

How Do You Calculate Your Annualized Cash Flow?

If you don’t yet have cash flow information for one year, you can use information from a shorter time period to estimate your totals. This is called annualization.

To use this Excel template to annualize your cash flow, you can, for example, take your net cash flow for one month and multiply it by 12.

However, this calculation assumes that your cash inflow and outflow will be the same for each of the twelve-month periods. Since these numbers can vary, annualized cash flow is only an approximation of your actual cash flow.

Is Cash Flow a Profit?

Cash flow and profitability are related, but are not the same. A cash flow statement shows the cash inflows and outflows, while an income statement lists the business income and expenses. There will be overlap between these two types of records, but they will not be identical.
Many types of expenses are cash outflows. If you buy something and pay for it in its entirety at the time of purchase, this purchase would be recorded on your income statement as well as your cash flow statement with the same date. But what if you borrow the money? Then, you would list the total price as an expense, but you would not list the cash outflow until you make actual payments against the loan. Then, each month, your cash flow statement would account for the payment.

Measure the Financial Strength of Your Business

An annual cash flow calculator can provide some details about the financial state of your business. This information can help you determine if your business generates the cash you need to sustain operations. You can see at a glance if your net cash flow is positive or negative.

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