Calculating Cash Inflow: A Guide for Businesses

Use the cash flow statement to calculate total cash inflow.

Many analysts believe cash flow is king. This is because the amount of cash a company brings in can differ greatly from net income due to accrual accounting. Accrual accounting, unlike cash accounting, counts the transaction (cash or credit) as paid when it comes in. That is, all sales, even credit sales, are counted immediately. Cash can also be generated from activities outside of operations, such as financing or investing. For this reason, investors like to look at the cash flow statement.

Step 1

Obtain the cash flow statement. The cash flow statement can be found in the company's annual report, which is usually posted on the website. You can also request a physical copy by calling Investor Relations for the company.

Step 2

Identify the cash flow statement. The cash flow statement has a listing of the cash inflows and outflows of the company. Outflows are denoted with parentheses to denote a deduction. The cash flow statement comprises three sections. They are cash flow from operations, cash flow from financing and cash flow from investing.

Step 3

Calculate the cash inflows. Again, cash inflows are positive and cash outflows are negative "()". Assume the cash inflows from operations are $5,000, the cash inflows from investing are $0 -- suggesting the company did not make any cash from investing activities -- and cash inflows from financing are $10,000 from a bank loan. The total cash inflows are $5,000 plus $0 plus $10,000 or $15,000.