Cash Flow Calculator
Project a business's net operating cash flow over a chosen horizon by combining revenue, operating expenses, tax, and ongoing capital expenditure. Use it to stress-test liquidity before signing leases, hiring staff, or taking on debt.
About this calculator
Cash flow is the actual money moving into and out of a business — distinct from accounting profit, which includes non-cash items like depreciation. This calculator approximates operating free cash flow with the formula: Cash Flow = ((Revenue − Operating Expenses) × (1 − Tax Rate / 100) − Capital Expenditure) × Months. Step 1 produces operating profit (Revenue − OpEx); step 2 tax-effects it to after-tax operating profit; step 3 subtracts monthly CapEx because cash leaves the business when the equipment is bought, not when it is depreciated; step 4 scales the monthly figure to the chosen horizon. Variables: Revenue is monthly cash collected (not invoiced — large accounts-receivable balances make the two diverge); Operating Expenses is everything you spend each month to run the business; CapEx covers equipment, vehicles, and software with multi-year useful life; Tax Rate is your blended effective rate. Edge cases: a negative operating profit produces a negative tax shield in this model (the formula assumes losses generate immediate tax benefit, which is only true if you have offsetting taxable income elsewhere); zero CapEx makes the result a simple after-tax operating cash flow; very high CapEx in a single month can mask sustainable underlying cash generation. The model does not capture changes in working capital (receivables, payables, inventory) or interest expense, so for a true free-cash-flow projection layer those on top.
How to use
Example 1 — Small consulting firm, 12-month view. Revenue $50,000/month, operating expenses $30,000/month, CapEx $5,000/month (laptops + office build-out), tax rate 25%. Enter 50000, 30000, 5000, 25, 12. Step 1: 50,000 − 30,000 = $20,000 operating profit. Step 2: 20,000 × (1 − 0.25) = $15,000 after-tax. Step 3: 15,000 − 5,000 = $10,000/month free cash flow. Step 4: 10,000 × 12 = $120,000 annual free cash flow. Verify the per-month math by hand ✓. Example 2 — Subscription startup, 18-month runway test. Revenue $24,000/month, opex $40,000 (growth-stage burn), CapEx $1,000 (just laptops), tax rate 0% (loss-making). Enter 24000, 40000, 1000, 0, 18. Step 1: 24,000 − 40,000 = −$16,000 operating loss. Step 2: × (1 − 0) = −$16,000 (no tax benefit at 0%). Step 3: −16,000 − 1,000 = −$17,000/month net cash burn. Step 4: × 18 = −$306,000 over 18 months. Verify: the company needs $306k in the bank (plus a safety buffer) to last 18 months — pair this with the burn-rate calculator to see runway in real time.
Frequently asked questions
What is the difference between operating cash flow and net profit?
Net profit is an accounting figure: revenue minus all expenses (including non-cash charges like depreciation and amortisation) and minus taxes. Operating cash flow is the actual cash generated by core business activities — it adds back non-cash expenses and adjusts for changes in working capital (accounts receivable, accounts payable, inventory). A company can report strong net profit while operating cash flow is weak or negative — common when customers pay on long terms, inventory is being built up, or sales are growing fast enough that working capital absorbs cash. The reverse is also possible: a profitable company in liquidation generates strong cash flow as receivables collect and inventory runs down. Cash flow, not net profit, is what pays bills, salaries, and debt service.
How does CapEx affect this cash flow projection?
Capital expenditure represents spending on long-lived assets — equipment, vehicles, software, building improvements — that benefits the business for multiple years. Accounting depreciates that cost across the asset's useful life, but the cash leaves the business the moment the cheque is written. This calculator subtracts CapEx after taxes because the depreciation tax shield is already reflected in the operating-expense line (assuming OpEx includes depreciation). For lumpy CapEx — a $200k machine bought in one month then nothing for three years — enter the monthly average over your analysis horizon to avoid skewing the projection, or build a more detailed month-by-month model in a spreadsheet. Capital-intensive businesses (manufacturing, telecom, real estate) often have profitable income statements but weak free cash flow precisely because CapEx is structurally high.
What are the most common mistakes when projecting cash flow?
The biggest is using accrual revenue (what you invoiced) instead of cash collected (what hit the bank): if customers pay 60 days late, the cash flow lags revenue by two months and a fast-growing business can run out of cash with a great-looking P&L. The second is ignoring changes in working capital — a 20% sales increase typically pulls cash into receivables and inventory, which can wipe out the apparent profit improvement. The third is omitting one-time costs that recur in practice: annual insurance, quarterly tax payments, seasonal inventory builds, and end-of-year bonuses all show up as cash spikes that monthly-average models miss. The fourth is assuming linear growth in everything; revenue often ramps unevenly and expenses grow in step changes (new hires, new office). Finally, many forecasts use optimistic revenue and pessimistic costs separately, which compounds error — instead, build conservative and aggressive scenarios as a pair.
When should I NOT use this calculator?
Skip this calculator for businesses with material non-operating cash flows: real estate companies (large debt service), holding companies (dividend income), or any business where investing and financing cash flows dwarf operating cash flow — for those, build a full statement of cash flows. Avoid it for businesses with material changes in working capital between periods (rapid growth, seasonal demand, long collection cycles) because the simple formula does not capture them. Do not use it for project-level cash flow analysis where the relevant question is NPV — discount future cash flows to present value instead of summing them at face value. And do not use it as a substitute for a 13-week rolling cash forecast in a turnaround situation; near-term liquidity management requires weekly granularity and explicit timing of receipts and disbursements.
How does this calculator interact with EBITDA, free cash flow, and burn rate?
EBITDA is operating profit before depreciation, amortisation, interest, and tax — a profit metric, not a cash metric. The calculator's after-tax operating profit (step 2) is closer to NOPAT (net operating profit after tax). Subtracting CapEx in step 3 converts that to a simplified free cash flow to firm (FCFF) — what the business generates for all capital providers. True FCFF also subtracts the change in working capital, which this model omits. Burn rate is just negative free cash flow expressed monthly: if this calculator returns −$17,000/month, your burn rate is $17,000/month and your runway is Cash Balance ÷ $17,000 months. Pair this calculator with the burn-rate calculator for runway, with EBITDA for operating efficiency, and with NPV for go/no-go decisions on multi-year projects.