Cash flow is the lifeblood of any business.
| Cash Flow Examples | |||
Example Inflows |
Revenue from sales |
Returns from investments |
Cash from financing (e.g. business loan, credit card) |
| Example Outflows |
Materials and supplies |
Labor costs |
Rent or mortgage |
How to Calculate Three Types Of Cash Flow
1. Operating Cash Flow (OCF)
Helps to gauge cash efficiency of your operations, forecasting future profitability.
How to calculate it: Total cash generated - Total cash used = Operating cash flow
2. Investment Cash Flow (ICF)
Helps to optimize your investment strategy, forecasting the impact of investments on your cash flow.
How to calculate it: Total cash generated from investments - Total cash used on investments = Investment cash flow
3. Financing Cash Flow (FCF)
Helps with assessing the manageability of debt and forecasting the impact of future financing activities
How to calculate it: Total cash generated from financing activities - Total cash used on financing activities = Financing cash flow
Brilliant Insights into Your Financial Position
Positive cash flow may indicate that:
- Your business is growing business growth
- You’re operating efficiently
- It’s time to invest in further growth
Negative cash flow may indicate that:
- You’re experiencing seasonality issues or operational inefficiencies
- Demand is weakening
- It’s time to revisit your road map and goals
How PNC Can Help
Calculating cash flow may seem boring, but it can help you set your business up for an exciting future. Get in touch with our small business banking consultants for cash flow support tailored to your unique needs. Visit Cash Flow Insight to get started.
