Annual Cash flow is the amount of money invested for a whole year. This article will discuss how to calculate annual cash flow in Excel with the proper illustration.
What Is Cash Flow and Why Is It Important?
Annual cash flow is the net amount of cash and property added and sold by the company for a calendar year. It can also be said of the net income of a company. It can also express as the sum of cash flow from the operation, investment, and financing.
Importance of Cash Flow in Business:
Cash flow is significant for all companies. They have to make a balance of the inflows and outflows of cash. Sometimes it happens that outflow of money increase so much. This stops the company’s ability to expand its business in new fields as well as in the existing ones. But when inflows money increases. there is a big scope for the company to expand its business.
Types of Cash Flow
There are three different types of cash flow. Annual cash flow is the sum of the three cash flows. Have a look at the cash flows.
Operational Cash Flow:
Operational cash flow is directly related to the company’s core business. Like, as the production of goods. It gets money from selling and the expense is the raw materials. And also need to mention, the difference should be positive to run a business smoothly.
Investing Cash Flow:
This is related to the different investment activities of the company. Like, such buy new assets, selling assets, investing or sell of bonds and securities, etc.
Financing Cash Flow:
Cash flow from financing involves taking a new loan, paying profit to shareholders, repaying loans, etc. to support the company and strengthen the company’s financial health.
Steps to Calculate Annual Cash Flow in Excel
This article will show how to calculate annual cash flow in detailed steps. We will consider the following dataset for calculation.
📌 Step 1: Separate Different Cash Flow Elements
First, we will separate all the elements into three types of cash flow.
📌 Step 2: Calculate Different Cash Flow Separately
In this step, we will apply a simple SUM operation to calculate different cash flows.
- Go to cell F11 and put the following formula.
- Then, press the Enter button to get the result.
- Similarly, we get the total of other cash flows.
Note: There are negative and positive values. Here, we marked them by changing the format of the numbers.
📌 Step 3: Calculate Annual Cash Flow
Now, we will calculate the annual cash flow. This is the sum of all three cash flows.
- Go to cell F14 and put the formula below.
- Then, press the Enter button.
Finally, get the annual cash flow.
Download Practice Workbook
Download this practice workbook to exercise while you are reading this article.
In this article, we described each step to calculating annual cash flow in Excel. We showed each step with a detailed explanation. I hope this will satisfy your needs.
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