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Cash flow formulas

Learn the most important cash flow formulas and principles to ensure your business is cash positive

The complete guide to cash flow for small businesses

As a small business owner, the survival of your business depends on the way your money moves. Understanding how cash flows in and out of your business gives you the power to grow strategically.

Free cash flow formula

Free cash flow (FCF) is the difference between cash generated from standard business operations and cash spent on assets. It indicates your business’s financial performance and health, and ability to stay in business.

Operating cash flow formula

Operating cash flow is the part of the cash flow statement that shows how much money a business earns from typical operations. It’s calculated as revenue minus operating expenses.

Net cash flow formula

Net cash flow is the difference between the money coming in and the money coming out of your business for a specific period. When you’re making money, this number will be positive.

Discounted cash flow formula

Discounted cash flow is a measure of anticipated cash flow. These cash flow projections give a forward-looking view into a business’s cash flow. Discounted cash flow (DCF) gives a business owner insight into whether they can afford to make a larger purchase or investment now and be able to pay it off later.

Levered free cash flow formula

Levered free cash flow is how much capital your business has after you’ve accounted for all payments to your short- and long-term financial obligations. LCFC represents the money available to investors, company management, shareholder dividends, and investments back into the business — equity investors essentially.

Unlevered free cash flow formula

Unlevered free cash flow is the cash flow a business has, excluding interest payments. Essentially, this number represents a company’s financial status if they were to have no debts.

As a small business owner, the survival of your business depends on the way your money moves. Understanding how cash flows in and out of your business gives you the power to grow strategically.

Free cash flow (FCF) is the difference between cash generated from standard business operations and cash spent on assets. It indicates your business’s financial performance and health, and ability to stay in business.

Operating cash flow is the part of the cash flow statement that shows how much money a business earns from typical operations. It’s calculated as revenue minus operating expenses.

Net cash flow is the difference between the money coming in and the money coming out of your business for a specific period. When you’re making money, this number will be positive.

Discounted cash flow is a measure of anticipated cash flow. These cash flow projections give a forward-looking view into a business’s cash flow. Discounted cash flow (DCF) gives a business owner insight into whether they can afford to make a larger purchase or investment now and be able to pay it off later.

Levered free cash flow is how much capital your business has after you’ve accounted for all payments to your short- and long-term financial obligations. LCFC represents the money available to investors, company management, shareholder dividends, and investments back into the business — equity investors essentially.

Unlevered free cash flow is the cash flow a business has, excluding interest payments. Essentially, this number represents a company’s financial status if they were to have no debts.

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