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:

1. Cash Flow from Operating Activities


2. Cash Flow from Investing Activities


3. 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.

For more details on how to calculate the individual line items in the cash flow statement, check out our example in the main cash flow statement tutorial.

All the best!

Michael Celender
Founder of Accounting Basics for Students


Related Questions & Tutorials:

• Cash Flow Statement: Purpose and Importance
• Cash Flow Statement: Dividends Paid under Financing or Operating Activities?
• The Indirect Cash Flow Statement Method
• Cash Flow Statement Exercise with Full Solution

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