1. What is Cash Flow?

Cash flow represents the net amount of cash moving in and out of a business or personal finances during a specific period. Positive cash flow indicates more money coming in than going out, while negative cash flow shows the opposite.

2. How Does the Calculator Work?

The calculator uses the basic cash flow equation:

Where:

• \( Inflows \) — All sources of incoming cash (revenue, investments, loans, etc.)
• \( Outflows \) — All expenses and payments (operating costs, purchases, debt payments, etc.)

Explanation: The calculation is straightforward but essential for financial health assessment.

3. Importance of Cash Flow Calculation

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

4. Using the Calculator

Tips: Enter all inflows and outflows in dollars. Be comprehensive in including all financial movements for accurate results.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between cash flow and profit?
A: Profit is revenue minus expenses on paper, while cash flow tracks actual money movement. A business can be profitable but have negative cash flow.

Q2: How often should I calculate cash flow?
A: For businesses, monthly calculation is recommended. Individuals might do it monthly or quarterly.

Q3: What if my cash flow is negative?
A: Negative cash flow requires analysis - it might be temporary (investment phase) or indicate financial trouble needing immediate action.

Q4: Should I include credit in cash flow?
A: Only include actual cash movements. Credit purchases become outflows when actually paid.

Q5: How can I improve my cash flow?
A: Strategies include accelerating receivables, delaying payables, reducing expenses, or securing financing.