Net Cash Flow Calculator
Calculate net cash flow from operating, investing, and financing activities.
Understand which section drives your cash position and how to interpret positive vs negative flows.
Net Cash Flow Formula
Net Cash Flow (NCF) is the total change in a company’s cash position during a period. It is the sum of cash flows from three activities:
Net Cash Flow = Operating Cash Flow + Investing Cash Flow + Financing Cash Flow
The Three Activities Explained
1. Operating Cash Flow (OCF) Cash generated from the core business operations — selling products or services.
A simple method (indirect):
OCF = Net Income + Non-Cash Charges (Depreciation & Amortization) − Increases in Working Capital
Non-cash charges are added back because they reduce accounting profit but do NOT reduce actual cash. Working capital increases (e.g., accounts receivable growing) consume cash without showing on the income statement.
2. Investing Cash Flow Cash used for or received from long-term asset investments.
- Negative (outflows): buying equipment, property, or other companies
- Positive (inflows): selling assets, receiving investment proceeds
3. Financing Cash Flow Cash from raising or repaying capital.
- Positive (inflows): issuing new shares, taking on debt
- Negative (outflows): repaying loans, paying dividends, buying back shares
Worked Example
A manufacturing company in Q3:
- Operating: Net Income $80,000 + Depreciation $20,000 − Working Capital Increase $15,000 = $85,000 OCF
- Investing: Bought a new machine for −$40,000
- Financing: Repaid bank loan −$25,000
NCF = $85,000 − $40,000 − $25,000 = $20,000 (cash increased by $20,000)
Interpreting the Results
| Scenario | Meaning |
|---|---|
| OCF+ / Investing− / Financing− | Ideal: business funds its own growth and debt repayment |
| OCF− / Financing+ | Company burning cash, raising money to survive (risky) |
| OCF+ / Investing− / Financing+ | Aggressive growth phase: using operations AND debt to invest |
| All three negative | Cash crisis — unsustainable without new capital |
Pro Tips
- OCF is often considered the most important section. Consistently negative OCF signals a fundamental business problem.
- A company can show accounting profit but negative cash flow (e.g., if customers owe money that is not yet collected).
- Cash flow is harder to manipulate than earnings — investors use it to verify the quality of reported profits.
- Free Cash Flow = OCF − Capital Expenditures (CapEx). This is what is left for shareholders after maintaining the business.