How to Calculate Your Cash Flow?

After discussing cash ins and cash outs we now come to the calculation of the cashflow. It starts from your profit after tax:

From this profit after tax the non-cash costs are removed and the working capital is taken into account.

We’ve still one important expense to consider: If the company pays off its loans, it doesn’t just pay interest. The capital repayments are also an important expense which impact the cash flow. Adapting the cash flow for these repayments brings us to the Free Cash flow.

Free Cash flow = Cash flow – Capital repayments

The following video gives you in 2:30 minutes a short overview of cash flow.

further reading

For a more profound understanding you can watch this video It will take a bit more time, 13:30 minutes precisely, but it’s worth it.

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