About the Cash Flow Statement Generator
This cash flow statement generator builds a statement of cash flows using the indirect method — the format most companies use under US GAAP and IFRS. Start with net income, add back depreciation and other non-cash charges, adjust for changes in working capital, then enter investing and financing activity. It produces the three sections — operating, investing and financing — the net change in cash, ending cash and free cash flow, laid out as a statement you can copy.
It is built for small business owners, bookkeepers, finance students and analysts who have an income statement and two balance sheets but need the cash flow statement that ties them together. Seeing net income next to operating cash flow shows quickly whether profits are turning into cash or being absorbed by receivables and inventory.
Enter working capital changes as the increase in each balance sheet account during the period (use a negative number for a decrease). Increases in current assets reduce cash; increases in current liabilities add cash. Interest paid and dividends received are treated as operating and dividends paid as financing, the usual US GAAP classification. Check that ending cash matches your balance sheet — if not, an item is missing.
With the default inputs, the net change in cash is $70,000.00. Change any value above to recalculate instantly.
How to use the cash flow statement generator
- 1Enter net income from the income statement and add back depreciation and other non-cash items.
- 2Enter any gain (or loss as a negative) on assets sold.
- 3For each working capital account, enter the change from the beginning to the end of the period.
- 4Enter capital expenditures, asset sale proceeds and other investing flows.
- 5Enter borrowing, repayments, stock issued and dividends paid, plus beginning cash.
- 6Check that ending cash agrees with your balance sheet, then copy the statement.
Formula and method
The indirect method starts with accrual-basis net income and converts it to cash. Non-cash expenses such as depreciation, amortization and stock compensation are added back because they reduced profit without using cash; gains on asset sales are subtracted because the full proceeds are shown under investing. An increase in a current asset (receivables, inventory, prepaids) means cash was tied up, so it is subtracted; an increase in a current liability (payables, accruals, deferred revenue) means cash was conserved, so it is added.
Investing activities cover buying and selling long-term assets and investments. Financing activities cover borrowing and repaying debt, issuing or buying back shares, and paying dividends. The sum of the three sections is the net change in cash, which should reconcile beginning cash to ending cash on the balance sheet. Free cash flow here is operating cash flow minus capital expenditures.
- CFO
- Net cash provided by (used in) operating activities
- CFI
- Net cash provided by (used in) investing activities
- CFF
- Net cash provided by (used in) financing activities
- Δ
- Ending balance − beginning balance for the period
Worked examples
Growing small business
Net income of $120,000 plus $35,000 depreciation and $5,000 other non-cash items, minus a $4,000 gain, is $156,000. Working capital used $16,000 (receivables +$18,000 and inventory +$12,000, partly offset by prepaids −$2,000, payables +$9,000 and accruals +$3,000), leaving operating cash flow of $140,000. Investing used $50,000 and financing $20,000, so cash rose $70,000 to $120,000.
Profitable but cash-poor
Despite $80,000 of profit, $105,000 went into extra receivables and inventory while payables funded only $15,000. Operating cash flow is exactly zero, so the $20,000 of capital spending and the cash increase were funded by $40,000 of new borrowing.
Net loss with a loss on sale
A $15,000 net loss still produces $17,000 of operating cash: add back $25,000 depreciation and the $3,000 loss on sale, add $8,000 collected from receivables and subtract $4,000 paid down on payables. Investing brings in a net $2,000 and debt repayments use $10,000.
Frequently asked questions
What is the indirect method of preparing a cash flow statement?+
The indirect method starts with net income and adjusts it for non-cash items (like depreciation) and changes in working capital accounts to arrive at cash from operating activities. Investing and financing sections are the same under both the direct and indirect methods.
Why is depreciation added back in the cash flow statement?+
Depreciation is an expense that reduces net income but involves no cash payment in the period — the cash left when the asset was bought, which is shown under investing. Adding it back undoes the non-cash reduction.
Why does an increase in accounts receivable reduce cash flow?+
An increase in receivables means sales were recorded in net income but the cash has not been collected yet. Subtracting the increase removes those uncollected sales. A decrease in receivables means you collected more than you billed, which adds cash.
Where do dividends and interest go on the cash flow statement?+
Under US GAAP, dividends paid are financing, while interest paid, interest received and dividends received are operating. IFRS allows more choice — interest and dividends paid may be operating or financing — as long as the policy is applied consistently.
What is free cash flow?+
Free cash flow is commonly measured as cash from operating activities minus capital expenditures. It shows the cash a business generates after maintaining and expanding its asset base, which is available to repay debt, pay dividends or reinvest.
My ending cash does not match the balance sheet. What is wrong?+
A mismatch means a balance sheet change is missing or misclassified. Check every current asset and liability, long-term asset purchases and sales, debt and equity movements, and non-cash items such as gains, losses and stock compensation.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.