Cash flow

From Investment Wiki

Cash flow:

Annual amounts available to an investor after subtracting debt service from Net Operating Income. For our analysis, Capital Expenses, Capital Costs and Capital Reserves are also applied. Formula - NET OPERATING INCOME – Loan Payment(s) – Capital Expenses – Capital Costs (24,000-10000-1000-0 = 13000)

To calculate the before tax Cash Flow, suppose the Net Operating Income is $24,000 and the debt service is $14,126. Also Capital expenses are $1000, Capital Costs are $500 and Capital Reserves expended are $200. Then the before tax Cash Flow is $24000-$14126-1000-500-200

Cash Flow may be calculated on a before tax or after tax basis.