# How to Calculate the Operating Cash Flow in Excel – 2 Methods

## 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.

## 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.

• Enter details.
• Enter the amount of cash in Column C.

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.

## 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.
• Enter the amounts in Column C.

• Select C17 and enter the formula below.
`=SUM(C5:C15)`

C17 indicates the amount of net free cash.

## 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.

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Shahriar Abrar Rafid

Shahriar Abrar Rafid, BSc, Naval Architecture and Marine Engineering, Bangladesh University of Engineering and Technology, Bangladesh, has worked with the ExcelDemy project for more than 1 year. He has written over 100+ articles for ExcelDemy. He is a professional visual content developer adept at crafting scripts, meticulously editing Excel files, and delivering insightful video tutorials for YouTube channels. His work and learning interests vary from Microsoft Office Suites and Excel to Data Analysis, VBA, and Video recording and... Read Full Bio

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