{"id":21671,"date":"2021-08-03T15:52:00","date_gmt":"2021-08-03T14:52:00","guid":{"rendered":"https:\/\/www.orama.ai\/academy-tesoreria\/learn-how-to-calculate-cash-flow\/"},"modified":"2023-09-14T11:11:46","modified_gmt":"2023-09-14T10:11:46","slug":"learn-how-to-calculate-cash-flow","status":"publish","type":"post","link":"https:\/\/www.orama.ai\/en\/academy-tesoreria\/learn-how-to-calculate-cash-flow\/","title":{"rendered":"Learn how to calculate cash flow"},"content":{"rendered":"

Learn how to calculate cash flow,<\/em> as it is an essential tool for good financial health<\/a>. Would you like to know how to calculate cash flow? We explain everything below.<\/p>\n

WHAT IS CASH FLOW?<\/h2>\n

First of all, it should be clarified that cash flow is a financial term that refers to the cash inflows and outflows that occur in a company in a given period. It is a key tool<\/a> for calculating the company’s financial status,<\/a> as it indicates how much cash the company has.<\/p>\n

In other words, if we have a negative cash flow it means that the company does not have sufficient liquidity to meet its debts<\/a>. On the other hand, if we have a positive cash flow, it means that we have liquidity.<\/p>\n

WHY IS CASH FLOW IMPORTANT?<\/h3>\n

Drawing up a cash flow is key, since, if we project it properly, we will be able to foresee when we are going to run out of liquidity<\/a>. In the event that we see that in a few months we are going to break even, we will have to reduce expenses .<\/p>\n

In addition, it will not only help us to take corrective measures, but also to plan our finances. If we know that we have X months of cash left (i.e., we have X
\nrunway<\/em>
\n<\/a> of X), we can start planning a financing round with time and, consequently, without losing decision-making power (since we will not be in a hurry to have this money).<\/p>\n

LEARN HOW TO CALCULATE CASH FLOW<\/em><\/h3>\n

As mentioned above, this tool is measured on the basis of the inputs and outputs that occur within a period (which is why we can analyze its operation in detail).<\/p>\n

Therefore, the cash flow has a very simple calculation: it is the sum of income and all expenses are subtracted from it <\/strong>. However, the potential of this tool lies in the breakdown that we can make.<\/p>\n

TYPES OF CASH FLOWS<\/h2>\n

We can separate the cash flow<\/em> into 3 different views: in this way we can understand which of the company’s revenues and which of its expenses are the result of operations, investment or financing, respectively.<\/p>\n

OPERATING CASH FLOW<\/h3>\n

The operating cash<\/strong> flow (or operating cash flow) comes from the ordinary income related to the direct activity of the company<\/strong>. That is, day-to-day revenues and costs. To exemplify income, it would be mainly sales. On the expense side, these would be the costs associated with the company’s economic activity.<\/p>\n

INVESTMENT CASH FLOW<\/h3>\n

In this case, the investment cash flow records the cash inflows and outflows related to the development of the company in terms of growth <\/strong>. To calculate it would be to add up all the income generated by investments, subtracting those made to improve a process.<\/p>\n

CFI is normally negative, as the company usually invests in the growth of the company.<\/p>\n

CASH FLOW FROM FINANCING<\/h3>\n

Finally, we have the financingcash flow<\/em>, which comes from the activities that change the business’s equity capital and the debts assumed<\/strong>. In other words, the difference between cash inflows and outflows related to the financing of the company.<\/p>\n

In this case, the CFF is usually positive, since the money comes in from the financing received.<\/p>\n

Once we have these cash flows<\/em> calculated, we can clearly see the financial health of the company, foresee liquidity problems, and even analyze the viability of investments. In short, it is a key financial indicator to know in what financial state your company is in.<\/p>\n

With the creation of scenarios and twelve-month forecasts with Orama<\/a>you will be able to to foresee possible liquidity problems before they occur. <\/strong>Likewise, you will always have up-to-date cash flow<\/em><\/strong> by performing the automatic bank reconciliation,<\/strong> thus avoiding possible errors derived from manual work in the Excel cash flow plan.<\/p>\n","protected":false},"excerpt":{"rendered":"

It is a fundamental tool for the financial health of the company. Would you like to learn how to calculate cash flow? Go for it!<\/p>\n","protected":false},"author":1,"featured_media":21566,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","inline_featured_image":false,"_joinchat":[],"footnotes":""},"categories":[163,157,139,63,159,156,1],"tags":[],"class_list":["post-21671","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-budget","category-forecast","category-presupuesto","category-simulacion","category-simulation","category-treasury","category-uncategorized","sala-blog-boxed"],"_links":{"self":[{"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/posts\/21671","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/comments?post=21671"}],"version-history":[{"count":3,"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/posts\/21671\/revisions"}],"predecessor-version":[{"id":23884,"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/posts\/21671\/revisions\/23884"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/media\/21566"}],"wp:attachment":[{"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/media?parent=21671"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/categories?post=21671"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/tags?post=21671"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}