Net cash flow from operating activities is an important indicator in the financial analysis of an enterprise, which reflects the net changes in cash inflows and outflows from daily operating activities. The following is a detailed and comprehensive explanation of how to calculate net cash flow from operating activities.
Business activities refer to the main business activities of an enterprise and other activities directly related to it, including the sale of goods, the provision of labor services, the purchase of raw materials, the payment of wages and taxes, etc. The cash inflows and outflows from these activities constitute the cash flow from operating activities.
Determine the cash inflow project:
(1) Cash received from the sale of goods and the provision of services:
This is often the most significant cash inflow for a business**.
The calculation formula is: main business income + other business income + opening balance of notes receivable - closing balance of notes receivable) + opening balance of accounts receivable - closing balance of accounts receivable) + closing balance of accounts receivable - opening balance of accounts receivable) - closing balance of accounts receivable - closing balance of accounts receivable provision for bad debts.
(2) Refund of taxes received:
Includes various **subsidies and tax refunds.
The calculation formula is: (Beginning Balance of Subsidy Receivable - Closing Balance of Subsidy Receivable) + Subsidy Income + Cumulative Credit Amount of Income Tax in the Current Period.
(3) Other cash received in connection with operating activities:
It includes non-operating income, other business income, other receivables, the increase in other payables, and interest income from bank deposits.
The calculation formula is: non-operating income related details current credit amount + other business income related details current credit amount + other receivables related details current credit amount + other accounts payable related details current credit amount + bank deposit interest income.
Identify cash outflow items:
(1) Cash for the purchase of goods and payment for services:
This is one of the most important cash outflow items for enterprises.
The calculation formula is: Cost of sales + Closing balance of inventory - Opening balance of inventory) 1 + VAT rate) + Other operating expenses (excluding taxes) + Opening balance of notes payable - Closing balance of notes payable) + Opening balance of accounts payable - Closing balance of accounts payable) + Closing balance of prepaid accounts - Opening balance of prepaid accounts).
(2) Cash paid to and for employees:
Including wages, welfare expenses, social insurance and housing provident fund, etc.
The calculation formula is: "Cumulative debit amount in the current period in the "Wages Payable" account + Cumulative debit amount in the current period in the "Welfare Expenses Payable" account + "Pension Insurance", "Unemployment Insurance", "Housing Provident Fund", "Medical Insurance Premium" in the management expenses + "Labor Protection Fee" in the detailed statement of costs and manufacturing expenses.
3.Calculation of net cash flow from operating activities:
The sum of all the above-mentioned cash inflows is subtracted from the sum of all cash outflows to obtain the net cash flow from operating activities.
During the calculation, the following points need to be noted:
Make sure that you are using financial data for the same period, such as opening balances and closing balances should correspond to the same accounting period.
Taking into account changes in tax policies and accounting standards, the calculation method of some items may be different and should be adjusted according to the actual situation.
For non-cash transactions (such as depreciation of fixed assets, amortization of intangible assets, etc.), although they do not affect cash flow, they need to be adjusted when preparing the cash flow statement.
In summary, the calculation of net cash flow from operating activities is a task that involves multiple financial data and complex formulas. Accurate understanding and application of these formulas can help companies better assess their operating conditions and cash flow management levels, and provide strong support for decision-making.
A detailed explanation of the calculation of net cash flow