1. What is Cash Flow Calculation?

Cash flow calculation measures the net amount of cash and cash-equivalents moving in and out of a business. Positive cash flow indicates increasing liquid assets while negative cash flow indicates decreasing liquid assets.

2. How Does the Calculator Work?

The calculator uses the basic cash flow equation:

Where:

• \( cf\_example \) — Net cash flow (currency)
• \( revenue \) — Total income or receipts (currency)
• \( expenses \) — Total expenditures or payments (currency)

Explanation: The equation provides a simple way to determine whether a business is generating more cash than it's spending.

3. Importance of Cash Flow Analysis

Details: Regular cash flow analysis helps businesses maintain solvency, plan for future expenses, and make informed financial decisions.

4. Using the Calculator

Tips: Enter revenue and expenses in the same currency units. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between cash flow and profit?
A: Profit includes non-cash items like depreciation, while cash flow only considers actual cash movements.

Q2: What is considered good cash flow?
A: Positive cash flow is generally good, but the ideal amount depends on business size, industry, and growth stage.

Q3: How often should cash flow be calculated?
A: Most businesses calculate cash flow monthly, though startups or volatile businesses may need weekly calculations.

Q4: What are common cash flow problems?
A: Common issues include late customer payments, over-investment in inventory, and unexpected expenses.

Q5: How can businesses improve cash flow?
A: Strategies include reducing expenses, improving receivables collection, negotiating better payment terms, and managing inventory efficiently.