Cash Flow Statement: How to Calculate the Net Increase or Decrease in Cash?
Q: How is the figure for net increase/decrease in cash calculated or arrived at?
A: To calculate the net increase/decrease in cash you simply add up the totals of the three sections:
Cash Flow from Operating Activities
Cash Flow from Investing Activities
Cash Flow from Financing Activities
In the cash flow statement above we calculate the net increase or decrease in cash flow as follows:
Net cash flow from operating activities + Net cash flow from investing activities + Net cash flow from financing activities = $24,800 - $9,000 + $14,000 = $29,800
Note that the net cash flow from investing activities is shown in parentheses () in the cash flow statement above, meaning that it is -$9,000 or a negative cash flow of $9,000.
Also note that the cash at the beginning and at the end of the period is just included as part of the end of the report as a sort of breakdown of the net increase or decrease in cash flow during the year. These figures can be obtained from the bank T-account.