What is the Cash Flow Analysis tool?
While the tool is similar to to the Statement of Cash Flow because it helps detail how cash flows through the business, it is a waterfall chart of cash flow instead of a financial statement. The Cash Flow tool helps to answer the question, "Where has my cash gone?".
In addition, this tool also helps to answer the following questions:
What is the quality of the cash flow?
Is cash flow sourced from core operations?
Is cash flow diminishing?
Is cash flow sustainable or subject to fluctuations?
The Cash Flow Analysis tool is accessible from the left sidebar in the Analysis tools by selecting the 'Cash Flow/Fan' icon.
⚠️ Error Alert: Are you receiving an error when viewing the Cash Flow Analysis tool? Please see our 'Cash Flow Analysis Error' article.
Understanding the Cash Flow tool
Three key numbers are displayed at the top of the tool:
Clicking on these numbers will drill down into additional detail about these cash flow measures, including how they’ve trended over time.
💡Pro Tip: If you select the the three key numbers and then select ‘expand formula’ in the menu that opens, you can view the exact values and formula used to calculate the results.
Operating Cash Flow
Operating cash flow is the cash generated by the operating activities of the business. Operating activities include the production, sales and delivery of the company’s product and/or services as well as collecting payment from its customers and making payment to suppliers.
Free Cash Flow
Free cash flow is the cash generated by the business after paying its expenses and investing for future growth; it is the cash left after subtracting capital expenditure from operating cash flow. The term “free cash flow” is used because this cash is free to be paid back to the suppliers of capital.
Net Cash Flow
Net cash flow is the cash left after subtracting expenditures from financing activities from the free cash flow. Financing activities include the inflow of cash from investors such as banks and shareholders, as well as the outflow of cash to shareholders as dividends. The waterfall chart helps to identify cash-in (green) and cash-out (red).
Changing the period or date range
In the top right corner of the Cash Flow Analysis tool, you’re able to change the period and date range displayed in the tool. The first bolded smart text option allows you to switch between viewing monthly, quarterly, or yearly results.
The second bolded smart text option enables you to choose which month, quarter, or year’s results you are viewing.
If you imported data through the current month in ‘Step 1 - Update Data’, then you can also view results for month-to-date (MTD), quarter-to-date (QTD) or year-to-date (YTD) periods, and select the ending month for these periods.
The cash flow amounts seem incorrect, how are they determined?
The cash flow amounts are determined primarily by how accounts are classified for the Chart of Accounts. If you believe the amounts are incorrect, then you’ll want to review account classifications in ‘Step 3 - Classifications’ of the company’s Settings.
Why doesn't the calculation at the bottom reconcile to the 'Net Cash Flow'?
In most cases the calculation will reconcile perfectly, however if the balance sheet is out of balance for the current period you may see a discrepancy. You can check the balance sheet in the Financials tool. If it is out of balance then a red indicator will show.
Download a PDF of the Cash Flow Analysis
You can download the Cash Flow Analysis to PDF from the left sidebar. The download option is located in the bottom left corner.
💡Pro Tip: You have the option to include a 'Basis of Preparation' or disclaimer statement as a page in PDF downloads. You can add or remove this statement in PDFs and customise the statement. Learn more in our 'Basis of Preparation statement' article.
Learn about the next Analysis tools available for additional insights into company or group performance. Or learn about the other areas of Fathom and share your discoveries with others.
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