Net cash flow represents the financial outcome, whether positive or negative, that a business experiences during a specific time frame.
It can be calculated as follows: Net Cash Flow = Total cash inflow - Total cash outflow.
Here are some examples:
- In scenario A, the business gained $25 because it had $300 coming in and $275 going out.
- In scenario B, the business suffered a loss of $150 as it received $150 but spent $300.
- In scenario C, there was a minor loss of $5 with $95 as income and $100 as expenses.
- In scenario D, the business had a net gain of $190, given that it earned $270 and had $85 in expenses.
- In scenario E, a substantial profit of $320 was achieved, with $400 in income and $80 in expenditures.
- In scenario F, a net profit of $245 resulted from $345 of income and $100 of expenses.
The cumulative cash balance for a given period adds up these individual net cash flows. For six months, it would be calculated as: $25 - $150 - $5 + $190 + $320 + $245 = $630.