The cash-flow and/or cash-flow [], yield capacity or Innenfinanzierungspotenzial, is an economical measured variable, with whose assistance one can judge the payment strength of an enterprise. It represents the pure deposit surplus (exclusive on one period referred difference between deposits and disbursements). A negative cash-flow becomes as cash Loss (English loss = loss) and/or cash drain [] (English drain = discharge) designated.

This designation is not to be equated with the net yield term. Rather the payment stream are regarded here. The indirect calculation method turns off to the liquid reserves. Therefore payment-ineffective expenditures represent as for example writings-off not spent financial means, which were considered however with the determination of the yearly surplus as expenditure. In order a such payment-ineffective post is the yearly surplus also for income side (for example increase of the enterprise value or a participation, dissolution of reserves) to be corrected.

Purpose and origin

In the result relating to the balance of an enterprise a multiplicity of factors as for example of writings-off and resetting are contained, which do not affect the material payment river. With the characteristic number cash-flow one tries to therefore determine the real payment stream.

Around relating to the balance, payment-effective factors settled success relating to the balance does not represent thus the cash-flow as payment-effective, financial surplus of the period.

The cash-flow is computed in particular, in order to determine,

• whether an enterprise from own Kraft can transact investments,
• as much money for debt retirement, interest payments and for payment is present to the partners,
• to what extent insolvency danger exists (over the years an existing negative cash-flow leads in all rule to the insolvency),

Like many other characteristic numbers to the enterprise analysis the cash-flow originates from the anglo-saxon area.

Determination

There are two fundamental procedures for the determination of the cash-flow value, i.e. the direct and the indirect determination.

Directly

For direct determination all payment-effective expenditures standing in connection with the current business activity (e.g. material costs, wages/salaries, interest expenditures, taxes) are subtracted from the payment-effective yields (e.g. sales profits, investment profits, the investments, interest yields, subsidies) of one period. Payment-effectively quite often also fund-effectively called, there the payments the currency existence or - funds to affect.

Indirectly

For the indirect determination success relating to the balance is usually consulted, profit (yearly surplus or operating result as vat size). Expenditure-neutral expenditures (payment effect do not have and accounting posts only relating to the balance are), as for example writings-off, increase of the long-term resetting and reserves as well as extraordinary (only temporarly resulted) expenditures are added. Income-neutral yields however like writing up and extraordinary yields are subtracted.

For the external view (special in the context of the end-of-year procedure analysis) mostly only the indirect cash-flow determination is available for reasons of the practicability.

For the indirect determination cash-flow in the context of the end-of-year procedure analysis does not give it an officially obligatory determination way. Therefore often different calculation methods are used, which can lead to confusion. It is recommended to publish the entire calculation. The German combination for financial analysis and investment advice (DVFA) and the narrow brook company for marketing and management (SG) recommend besides a uniform computation form.

Cash-flow

The cash-flow in its simplest form (also gross cash-flow and thus the entire cash-flow gained by the enterprise) is:

Yearly surplus/deficit

+ writings-off (- writing up)

+ increase (- acceptance) of the long-term resetting (inclusive pension resetting & special items with share of the reserves)

= cash-flow

Net cash-flow and Free cash-flow

Since the cash-flow can be used now for debt retirement and further derived sizes must be determined, in order to determine, how much financial means for investments and dividend payments are available. For the determination of the net cash-flow and the Free of cash-flow spend-relevant expenditures must after the balance list, how private withdrawals and investments are taken off from the cash-flow. Payment-effective yields, which are transacted after the balance (for example the investments), must however are added.

From the gross cash-flow thus the following sizes can be derived:

• Net cash-flow (cash-flow settles among other things around payments of taxes, financing expenses, reserves changes)

Gross cash-flow

- Payments of taxes (only with determination gross cash-flow with result before taxes)

- Interest payments (only with determination gross cash-flow with result before interest) and amortization payments

(- Private withdrawals at unincorporated firms)

Dissolution of reserves supply

• Free cash-flow (cash-flow before dividends and after current investments)

Net cash-flow

- Investments (from business activity: Spare and Erweiterungsinvestionen)

+ the investments

The Free cash-flow is the freely available cash-flow. It clarifies, as much money for the dividends of the shareholders and/or partners remains. The size of the Free of cash-flow is practically balance-technically not manipulatable.

Capital river calculation in the end-of-year procedure

Is considered by the capital river calculation to the representation of the financial situation of the enterprise in the end-of-year procedure.

Capital river calculation in the according to commercial law company conclusion

Company nut/mother enterprises must publish 1 P. 1 HGB in its company conclusion a capital river calculation after "§ 297 exp. The obligation for the list of a capital river calculation was introduced only 1997 with the KonTraG for quoted companies and expanded 2002 on all companies. Since the capital river calculation in the HGB is not more near described, capital river calculation became "“with rules the list of German accounting standards the Committee of the DRS 2 "„and disclosure issue, which orient themselves substantially at the respective IAS (IAS 7) and US-GAAP (SFAS 95).

After capital river calculation IAS/IFRS and US-GAAP

Understanding coined/shaped by the anglo-saxon "„statements OF cash flow the "“refers likewise like net and Free cash-flow the investment and financing activity of the enterprise into the view. The suggested capital river calculation, which also the DRS 2 essentially follows, is arranged into three of cash-flow:

• Cash-flow from current business activity (also operational cash-flow): after correction and/or used money gained over at short notice (working capital, in addition count in particular supplies and short term demands)
• Cash-flow from investment activity: after correction around central consumption from investments and the investments
• Cash-flow from financing activity: after correction around used up means for dividends, interest payments and loan repayments as well as happened means from capital increase and loan photographs

For details according to the regulation IAS/IFRS see IAS 7.

See also

• Discounted cash-flow (procedure for the assessment of company value)
• Capital river calculation
• Creation of value delivery (cash-flow per coworker serves as basis of the creation of value computation)

Literature

• Friedrich of its, the cash flow as instrument of the statement analysis, 1991
• Ingo Leutiger, cash-flow: Decision basis for the organization D. Enterprise future, 1987
• Matthias Amen: Production of capital river calculations, 2. , edition, Munich/Vienna supplemented: R. Oldenbourg publishing house, 1998

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