Net cash flow from operating activities refers to the net cash inflow from operating activities minus cash outflow from an enterprise in a certain period. It is an important embodiment of the results of business activities, and it is also an important part of the funds required for investment activities and daily operations. So, what is the calculation method of net cash flow from operating activities?
1. Determine the cash inflow from operating activities.
Cash inflow from operating activities refers to the cash income received by an enterprise from business activities such as the sale of goods or the provision of services. When calculating the net cash flow from operating activities, it is first necessary to determine the cash inflow from operating activities. In general, cash inflows from operating activities mainly include the following:
1.cash received for the sale of goods or the provision of services;
2.Investment income such as rent, interest, dividends, etc. received;
3.Refund of VAT, income tax and other taxes received;
4.Other cash received in connection with operating activities.
2. Determine the cash outflow from operating activities.
Cash outflow from operating activities refers to the cash expenditure paid by an enterprise for carrying out operating activities. When calculating net cash flow from operating activities, it is necessary to determine the cash outflow from operating activities. In general, cash outflows from operating activities mainly include the following:
1.cash paid for the purchase of goods or the receipt of services;
2.Investment expenses such as rent, interest, dividends, etc. paid out;
3.Taxes such as VAT, income tax, etc. paid
4.Other cash paid in connection with operating activities.
3. Calculate the net cash flow from operating activities.
Net cash flow from operating activities = Cash inflow from operating activities - Cash outflow from operating activities.
In practice, the following steps can generally be taken to facilitate the calculation:
1.Cash inflows and cash outflows from operating activities are summarized separately
2.Subtract cash outflows from cash inflows to get net cash flow from operating activities;
3.The difference between net cash flow from operating activities and net profit from operating activities is verified by comparing the net cash flow from operating activities with the net profit in the income statement.
4. Precautions.
When calculating the net cash flow from operating activities, the following points need to be noted:
1.The calculation should be carried out on the basis of the cash basis, that is, the actual cash received and the actual cash paid should be used as the basis, and the calculation should not be based on the accrual basis
2.The impact of investment and financing activities on cash flows should be taken into account, as these activities may have an impact on cash inflows and outflows from operating activities;
3.Attention should be paid to distinguishing the nature and use of cash flows from operating activities and other cash flows in order to correctly calculate the net cash flow from operating activities.
In short, calculating the net cash flow from operating activities is one of the important contents of financial analysis. By calculating the net cash flow from operating activities, we can understand the true situation of the company's financial status and operating results, which is helpful for the company to make correct investment decisions and management decisions.