Cash Flow Calculator
Cash from operations, investing and financing, with the bridge from operating profit that shows exactly where a profitable month's money went.
Opening cash $82,000.00
From operations
operating profit +$34,000.00
add back depreciation +$6,500.00
change in receivables -$41,000.00
change in inventory -$12,000.00
change in payables +$9,000.00
cash from operations -$3,500.00
From investing
capital spending -$18,000.00
cash from investing -$18,000.00
From financing
loans received +$0.00
loans repaid -$4,200.00
dividends -$0.00
cash from financing -$4,200.00
Net movement -$25,700.00
Closing cash $56,300.00
Profit against cash
operating profit $34,000.00
cash from operations -$3,500.00
the gap -$37,500.00
where it went into working capital: money tied up in unpaid invoices and stock
cash conversion -10.3% of profit turned into cash
Free cash flow -$21,500.00
which is cash from operations less what you had to spend on assets
Operating profit is $34,000.00 and cash from operations is -$3,500.00.
The $37,500.00 difference is working capital and depreciation, and it is
the reason a profitable month can leave the bank account emptier than it
started.
Depreciation is added back because it is an expense that moved no money:
the cash left when the asset was bought, which shows up under investing
instead. That is the whole reason the bridge exists.
Receivables rose by $41,000.00, which is $41,000.00 of sales you have
made and not been paid for. Growth on credit terms consumes cash: every
extra pound of sales is a pound tied up until the customer pays, which
is why growing quickly and running out of money happen together.
Payables are a free loan from your suppliers, and stretching them is the
fastest way to improve cash at the cost of the relationship. Paying on
the agreed day rather than early is reasonable; paying late is borrowing
from people who did not agree to lend.
Free cash flow is what is left after keeping the assets going. It is the
number that funds a dividend, a repayment or a hire, and a business
generating profit with no free cash flow is reinvesting everything it
earns, deliberately or otherwise.
Cash is a fact and profit is an opinion, in the sense that profit
depends on accounting judgements about when revenue is earned and how
costs are spread. The bank balance does not.
A month is a short period for this. Seasonality, a single large invoice
and payment timing all swamp the underlying picture, so the useful
version is a rolling thirteen-week forecast rather than a retrospective
month.
This is arithmetic, not accounting. A statutory cash flow statement has
a prescribed layout, tax and interest sit in specific places, and the
indirect method starts from profit before tax rather than operating
profit.
Output is valid and updates as you type.
Fix the highlighted fields to update the output.
A month with $34,000 of operating profit and $3,500 of cash going out of the door is not a mistake. It is the normal way a growing business runs out of money.
Profit is earned; cash is collected. The gap is working capital: invoices raised and not paid, stock bought and not sold, bills received and not yet paid. On the example below, receivables rose $41,000, which is $41,000 of sales made and not collected, and that alone turns a good month into a negative one.
So this does both halves: what came in and went out, and the bridge from profit that shows exactly where the money went.
How to use
- Put in the opening cash and the operating profit.
- Put in the changes in receivables, stock and payables. An increase in the first two consumes cash; an increase in payables provides it.
- Add capital spending, loans and dividends.
Example
Opening cash $82,000.00
From operations
operating profit +$34,000.00
add back depreciation +$6,500.00
change in receivables -$41,000.00
change in inventory -$12,000.00
change in payables +$9,000.00
cash from operations -$3,500.00
From investing
capital spending -$18,000.00
From financing
loans repaid -$4,200.00
Net movement -$25,700.00
Closing cash $56,300.00
Profit against cash
operating profit $34,000.00
cash from operations -$3,500.00
the gap -$37,500.00
where it went into working capital: money tied up in unpaid invoices and stock
Free cash flow -$21,500.00Pitfalls
Growth consumes cash. Every extra pound of sales on credit terms is a pound tied up until the customer pays. A business growing 20 percent a month on 60-day terms can be profitable, growing and insolvent at once, and the faster it grows the worse the cash position gets.
Depreciation is added back because it moved no money. The cash left when the asset was bought, which shows up under investing. That is the whole reason the bridge exists, and it is why a capital-heavy business shows profit well below its cash generation.
Payables are a loan from your suppliers. Stretching them improves cash at the cost of the relationship. Paying on the agreed day rather than early is reasonable; paying late is borrowing from people who did not agree to lend.
Free cash flow is the number that funds anything. Cash from operations less what you must spend on assets. A business with profit and no free cash flow is reinvesting everything it earns, deliberately or otherwise.
A single month is too short a period. Seasonality, one large invoice and payment timing swamp the underlying picture. The useful version is a rolling thirteen-week forecast, updated weekly.
Cash is a fact; profit involves judgement. When revenue is earned and how costs are spread are accounting decisions. The bank balance is not.
Watch the direction of the working capital fields. An increase in receivables is a cash outflow, which is why it appears with a minus in the bridge. Entering it negative because it “feels” like a cost double- counts it.
Compatibility
Arithmetic in the browser: nothing is uploaded and nothing is stored.
The bridge is the indirect method: profit, add back depreciation, subtract the increase in receivables and inventory, add the increase in payables. The tests assert it reconciles, and that a fall in working capital releases cash rather than consuming it.
Sections follow the standard three: operations, investing and financing. Capital spending, loans and dividends are entered as positive numbers with the signs applied in the statement, so a mistyped minus cannot invert a section.
A statutory cash flow statement has a prescribed layout and puts tax and interest in specific places, and the indirect method there starts from profit before tax rather than operating profit. This is the management version: the same arithmetic, arranged to answer where the money went.