# What is my cash flow?

Computes operating cash flow from net income or operating income and free cash flow after capital expenditures, for a business over one period.

- Page: https://www.acalculator.org/finance/cash-flow-calculator
- JSON spec: https://www.acalculator.org/finance/cash-flow-calculator.json
- Version: 682d657b4e97

## Default answer

Example with the default inputs (Operating cash flow From net income, Net income $35,000.00, Depreciation and amortization $3,600.00, Increase in working capital $0.00, Capital expenditures $13,600.00): Operating cash flow of $38,600.00 minus $13,600.00 of capital spending leaves free cash flow of $25,000.00.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| from | Operating cash flow | Work it out from net income or operating income, or type it from a cash flow statement. |
| ni | Net income | Profit after all expenses, interest and taxes. Negative for a loss. |
| ebit | Operating income | Earnings before interest and taxes (EBIT). |
| tax | Taxes paid | Income taxes for the period. |
| da | Depreciation and amortization | Non-cash charges taken off to reach income, added back here. |
| nwc | Increase in working capital | The rise in current operating assets minus current operating liabilities. Negative for a decrease. |
| ocf | Operating cash flow | Net cash from operating activities. |
| capex | Capital expenditures | Cash spent on property, plant and equipment. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| fcf | Free cash flow | Operating cash flow minus capital expenditures. |
| operatingCash | Operating cash flow | Cash from the business’s day-to-day operations. |
| capexOut | Capital expenditures | Cash spent on long-term assets. |

## Method

Operating cash flow = net income + depreciation and amortization − increase in working capital; or operating income + depreciation and amortization − taxes − increase in working capital; or typed. Free cash flow = operating cash flow − capital expenditures.

## Assumptions

- All amounts cover the same period.
- An increase in working capital uses cash and is taken off; a decrease frees cash and is added.
- Arithmetic is exact on the typed decimals; money shows to the cent, halves up.

## Worked examples

1. from = typed, ocf = $53,600.00, capex = $13,600.00 gives fcf = $40,000.00. Source: OpenStax, Principles of Finance, 5.6 Operating Cash Flow and Free Cash Flow to the Firm (FCFF) (free cash flow = operating cash flow − capital expenditures; Clear Lake Sporting Goods: 53,600 − 13,600 = 40,000). https://openstax.org/books/principles-finance/pages/5-6-operating-cash-flow-and-free-cash-flow-to-the-firm-fcff: 53,600 − 13,600 = 40,000.
2. from = net, ni = $35,000.00, da = $3,600.00, nwc = -$15,000.00, capex = $13,600.00 gives operatingCash = $53,600.00, fcf = $40,000.00. Source: OpenStax, Principles of Accounting, Volume 1, 16.3 Prepare the Statement of Cash Flows Using the Indirect Method (net income, plus depreciation, minus increases in current operating assets, plus increases in current operating liabilities). https://openstax.org/books/principles-financial-accounting/pages/16-3-prepare-the-statement-of-cash-flows-using-the-indirect-method; OpenStax, Principles of Finance, 5.6 Operating Cash Flow and Free Cash Flow to the Firm (FCFF) (free cash flow = operating cash flow − capital expenditures; Clear Lake Sporting Goods: 53,600 − 13,600 = 40,000). https://openstax.org/books/principles-finance/pages/5-6-operating-cash-flow-and-free-cash-flow-to-the-firm-fcff.
3. from = operating, ebit = $43,000.00, tax = $6,000.00, da = $3,600.00, nwc = $2,500.50, capex = $20,000.00 gives operatingCash = $38,099.50, fcf = $18,099.50. Source: OpenStax, Principles of Finance, 5.6 Operating Cash Flow and Free Cash Flow to the Firm (FCFF) (free cash flow = operating cash flow − capital expenditures; Clear Lake Sporting Goods: 53,600 − 13,600 = 40,000). https://openstax.org/books/principles-finance/pages/5-6-operating-cash-flow-and-free-cash-flow-to-the-firm-fcff (operating cash flow = operating income + depreciation − taxes, less the rise in working capital).
4. from = net, ni = -$8,000.00, da = $5,000.00, nwc = $1,000.00, capex = $4,000.00 gives operatingCash = -$4,000.00, fcf = -$8,000.00. Source: OpenStax, Principles of Accounting, Volume 1, 16.3 Prepare the Statement of Cash Flows Using the Indirect Method (net income, plus depreciation, minus increases in current operating assets, plus increases in current operating liabilities). https://openstax.org/books/principles-financial-accounting/pages/16-3-prepare-the-statement-of-cash-flows-using-the-indirect-method.

## FAQ

### What is free cash flow?

Free cash flow is the cash a business has left after paying for its operations and its investment in equipment and buildings. It is operating cash flow minus capital expenditures, and it is the cash that can repay debt or pay dividends.

### How do I calculate operating cash flow from net income?

Start with net income, add back depreciation and amortization (they cost no cash this period), and take off any increase in working capital. Net income of $35,000, depreciation of $3,600 and a $15,000 fall in working capital give 35,000 + 3,600 + 15,000 = $53,600.

### How do I calculate free cash flow?

Take capital expenditures off operating cash flow. Clear Lake Sporting Goods had operating cash flow of $53,600 and spent $13,600 on long-term assets, so its free cash flow was $40,000.

### Why does an increase in working capital lower cash flow?

Working capital is current operating assets (such as receivables and inventory) minus current operating liabilities (such as payables). When it rises, cash is tied up in unpaid invoices or stock on the shelf. When it falls, cash is released.

### Can free cash flow be negative?

Yes. A loss, a big build-up of stock or heavy spending on equipment can all make free cash flow negative. A growing business often has negative free cash flow while it invests.

### What is the difference between cash flow and profit?

Profit counts income and expenses when they are earned or used, including non-cash charges such as depreciation. Cash flow counts money when it actually comes in or goes out. A profitable business can still run short of cash.

## Sources

- OpenStax, Principles of Finance, 5.6 Operating Cash Flow and Free Cash Flow to the Firm (FCFF): operating cash flow from operating income, depreciation, taxes and working capital; free cash flow = operating cash flow − capital expenditures (Clear Lake Sporting Goods: 53,600 − 13,600 = 40,000). https://openstax.org/books/principles-finance/pages/5-6-operating-cash-flow-and-free-cash-flow-to-the-firm-fcff (retrieved 2026-10-05)
- OpenStax, Principles of Accounting, Volume 1, 16.3 Prepare the Statement of Cash Flows Using the Indirect Method: net income adjusted for depreciation and changes in current operating assets and liabilities. https://openstax.org/books/principles-financial-accounting/pages/16-3-prepare-the-statement-of-cash-flows-using-the-indirect-method (retrieved 2026-10-05)