Cash Flow Calculator
Reconcile accounting profit to the cash that actually arrived, and find out what share of reported earnings survives the journey to the bank account.
Cash Flow Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- A single-period reconciliation that cannot show the trend buyers and lenders care about.
- Working-capital movements must be entered as changes, not balances.
- Excludes financing inflows and equity movements, which are outside operating cash flow.
In short: Net income of $173,800 plus $96,000 of depreciation less $117,500 absorbed by working capital is $152,300 of operating cash flow — 87.63% of reported profit. After capex, free cash flow is $12,300.
Formula
This is the indirect method used in published accounts. It starts from profit and adjusts for everything that moved cash without moving the profit line, and everything that moved profit without moving cash.
Worked Example
- Start with net income. $173,800 of reported profit. This already deducts depreciation, which never cost the business any cash.
- Add back the non-cash charges. $96,000 of depreciation returns to the total. It reduced profit but no money left the business.
- Adjust for working capital. Inventory rose $105,000 and receivables $85,000, both consuming cash; payables rose $72,500, providing it. Net effect is $117,500 absorbed.
- Read the operating cash flow. $152,300 against $173,800 of profit — 87.63% conversion. The missing 12% is sitting in stock and unpaid invoices.
- Deduct capex and debt. $140,000 of capex leaves $12,300 of free cash flow, and $200,000 of principal takes it to negative $187,700.
The final line is the one that catches people out. This business reported $173,800 of profit and still ended the year $187,700 short after capital spending and debt repayment. Nothing was mismanaged and nothing was misreported — the gap comes from three items the income statement handles differently from cash: depreciation is deducted from profit but costs nothing, working capital consumes cash but is not a cost, and principal repayment is a genuine outflow that never appears as an expense. The $117,500 absorbed by working capital is precisely the figure batch 33 identified as the cash cost of 25% growth, which is what makes the reconciliation worth reading rather than just computing: it names where the profit went.
Strengths & Limits Of This Model
Where this engine is strong
- Shows the full bridge line by line rather than only the result.
- Reports the cash conversion ratio as an explicit quality-of-earnings test.
- Continues past free cash flow to the position after debt repayment.
Where it stops
- Cannot separate maintenance from growth capex without a manual estimate.
- Says nothing about the timing of cash within the period.
Practical Use Cases
Explaining why a profitable year produced no cash
The reconciliation names each cause in dollars, which is far more useful in a board meeting than the headline cash movement.
Assessing earnings quality before an acquisition
Conversion persistently below 100% signals earnings that do not become cash. Buyers price it. Check the exit impact with the Business Valuation Calculator.
Planning debt capacity realistically
Free cash flow after maintenance capex is what services debt, not EBITDA. Test it with the Debt Service Coverage Ratio Calculator.
Diagnosing where cash is trapped
If working capital is the drag, the cycle is the cause. Decompose it with the Cash Conversion Cycle Calculator.
Methodology & Editorial Standards
The engine reconciles net income to operating cash flow using the indirect method, the presentation used in published accounts, then continues to free cash flow and to the position after debt repayment. Three categories of adjustment are applied. Non-cash charges, principally depreciation and amortisation, reduced profit without consuming cash and are added back. Working-capital movements consumed or released cash without appearing on the income statement at all: increases in inventory and receivables absorb cash, while increases in payables provide it. Capital expenditure consumes cash but is capitalised rather than expensed, so it never reduces profit in the period it occurs, and debt principal is a pure cash outflow with no income statement effect whatsoever. The cash conversion ratio, operating cash flow divided by net income, is the standard quality-of-earnings test, and sustained readings below 100% indicate profit that is not becoming cash — a pattern buyers, lenders and auditors all examine closely. The engine also reports free cash flow on a maintenance-capex basis, approximated by substituting depreciation for actual capital spending, since that figure estimates what the business generates while merely maintaining its current capacity rather than expanding it. The engine implements the standard published formula for this calculation. Inputs are validated for domain and sign before evaluation, and any undefined case returns an em-dash rather than a spurious value.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Cash Flow Calculator — 20 Expert FAQs
20 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
Why is my profit different from my cash?
Three reasons: depreciation reduces profit without costing cash, working capital consumes cash without being a cost, and principal repayment never appears on the income statement.
What is operating cash flow?
Net income adjusted for non-cash charges and working-capital movements — $152,300 here against $173,800 of reported profit.
What is free cash flow?
Operating cash flow less capital expenditure — $12,300 here. It is the cash genuinely available to repay debt, invest or distribute.
What is a good cash conversion ratio?
Above 100% is healthy. Here it is 87.63%, meaning about 12% of reported profit did not become cash and is sitting in working capital.
Why is depreciation added back?
Because it reduced profit but no money left the business. It is an allocation of a past cash outflow, not a current one.
Why does inventory reduce cash flow?
Buying stock consumes cash immediately but only becomes a cost when sold. Here $105,000 of inventory build consumed cash invisibly.
What is the indirect method?
Starting from net income and adjusting to cash, as published accounts do. The direct method lists actual receipts and payments instead.
Can a profitable business have negative cash flow?
Routinely. Here $173,800 of profit still ends $187,700 short after capex and debt repayment.
Why is principal repayment excluded from profit?
Because it repays a balance sheet liability rather than consuming a resource. Only the interest portion is an expense.
What is maintenance capex?
Spending needed to sustain current capacity, approximated by depreciation. Here that basis would give $56,300 rather than $12,300.
What free cash flow margin is normal?
Mature businesses commonly run 5% to 10% of revenue. Here 0.51% leaves very little room for debt service or distributions.
Should capex exceed depreciation?
Growing businesses usually spend more; here capex is 145.83% of depreciation. Persistently spending less than depreciation flatters cash flow temporarily.
How do lenders use cash flow?
They test whether cash covers debt service. EBITDA overstates it because capex and working capital are excluded from that measure.
Does growth always reduce cash flow?
Almost always in the short term, because working capital must be funded before the resulting profit is collected.
What does negative operating cash flow mean?
The business consumed cash from trading itself, regardless of the profit reported. It is not sustainable without external funding.
How does cash flow affect valuation?
Buyers pay for cash, not accounting profit. EBITDA that does not convert is discounted during diligence, usually late in a process.
Is this cash flow calculator free to use?
Yes. It is free, requires no account, and has no usage limits. ApexConverter is funded by contextual advertising, never by selling user data.
Is my data sent to a server?
No. The engine runs as Vanilla JavaScript inside your browser under our Zero-Server Client-Side Execution model. Your figures are computed locally and are never transmitted, logged, or stored.
How accurate is this calculator?
It applies the standard closed-form formula in IEEE-754 double precision, rounding only at the display layer. The engine is reconciled against an independent reference implementation before release.
Does it work on mobile?
Yes. The interface is mobile-first with numeric keypad hints and is tested down to a 320-pixel viewport with no horizontal scrolling.