## Method 1 – Using Direct Method to Calculate Operating Cash Flow in Excel

The generic formula is:

**Operating Cash Flow = Cash Inflows – Cash Outflows**

**Steps**

- Create a layout of the
**Operating Cash Flow Statement (Direct Method)**as shown below. - Include
**Cash Inflows**,**Cash Outflows,**and**Net Operating Cash**.

- Detail Cash Inflows and Outflows.
- Enter the amount of cash in
**Column C**.

- Select
**C14**and use the following formula.

`=SUM(C6:C12)`

The amounts in **B6:B12** were added. The amounts in **B9:B12** are shown in parentheses (they have a negative value). They are subtracted while using **the SUM function**.

**Read More: **How to Calculate Payback Period in Excel (With Easy Steps)

## Method 2 – Applying the Indirect Method to Calculate the Operating Cash Flow in Excel

The generic formula is:

**Operating Cash Flow = Net Income + Non-Cash Expenses +/- Changes in Assets and Liability**

The required components are:

**Net Income:** It is taken into account as a starting point.

**Non-Cash Expenses:** It includes **Depreciation**, **Amortization**, **Stock-Based Compensation**, **Deferred Income Tax,** and other non-cash items.

**Assets and Liability:** It contains **Account Receivable**, **Inventory**, **Accounts Payable**, **Accrued Expenses**, and **Deferred Revenue**.

The full form of the above formula is:

**Operating Cash Flow = Net Income + Depreciation + Amortization + Stock-Based Compensation + Deferred Income Tax + Other non-cash items – Increase in Account Receivable – Increase in Inventory + Increase in Accounts Payable + Increase in Accrued Expenses + Increase in Deferred Revenue**

** Steps**

- Create a layout of the
**Operating Cash Flow Statement (Indirect Method)**as shown below. - Include
**Net Income**,**Non-Cash Expenses,****Change in Working Capital,**and**Net Operating Cash**.

*Note:** Here, Inventory, Accounts Receivable and Prepaid Expenses are *

*negative. An increase in these elements subtracts them in the*.

**formula**- Select
**C15**and use the following formula.

`=SUM(C5:C13)`

This is the output.

**Read More: **How to Calculate Payback Period with Uneven Cash Flows

## How to Calculate the Free Cash Flow in Excel

The generic formula to** calculate free cash flow** is:

**Free Cash Flow = Net Income + Non-Cash Expenses +/- Changes in Assets and Liability – Capital Expenditure**

, which means:

**Free Cash Flow = Operating Cash Flow (Indirect Method) – Capital Expenditure**

**Steps**

- Add rows to the previous worksheet.
- Add
**Capital Expenditure**and detail**Purchasing New Workstation**. - Enter the amounts in
**Column C**.

- Select
**C17**and enter the formula below.

`=SUM(C5:C15)`

**C17** indicates the amount of net free cash.

**Read More: **Calculating Payback Period in Excel with Uneven Cash Flows

## How to Calculate the Cash Flow Forecast in Excel

The generic formula is:

**Cash Flow Forecast = Beginning Cash + Projected Inflows – Projected Outflows**

**Beginning Cash:**The amount of available cash.

**Projected Inflows:**The amount of money you anticipate within the specified time frame.

**Projected Outflows:**The costs and extra payments you’ll have to make within the specified time frame.

**Steps**

- Create a layout of the
**Cash Flow Forecast**as shown below. - Include
**Beginning Cash**,**Cash Inflows**, and**Cash Outflows**.

- Enter details.
- Enter the amount of cash in column
**C**.

- Select
**C15**and enter the following formula.

`=SUM(C5:C13)`

**C15** indicates the amount of net forecast cash.

**Read More: **How to Calculate Discounted Payback Period in Excel

**Download Practice Workbook**

Download the following Excel workbook.

**Related Articles**

- How to Calculate Incremental Cash Flow in Excel
- How to Forecast Cash Flow in Excel
- How to Calculate Cumulative Cash Flow in Excel
- How to Apply Discounted Cash Flow Formula in Excel
- How to Create a Cash Flow Waterfall Chart in Excel

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