This model has a filled in income statement for year 1 (completely finished). It also has a filled in balanced sheet (completely finished apart from the cash balance) We need to calculate a cash flow statement for that, so let's go down below that and start to fill that in My cash flow statement is going to start with net income from the income statement Scroll up and we find that in our income statement 25.4 Next up, I need to add back depreciation Depreciation has been included in net income, oops that's not a cash flow statement, so we need to add that back Now at the moment it's shown as a negative (I want to add it back) So I have put a negative sign in my formula to flip the sign to make it positive Change in operating working capital. That's quite an involved calculation, so we'll leave that blank for now So my cash flow from operations is the sum of the three items above and have I included that blank change in operating working capital So that when I do fill it in, it will be automatically included in the total Next up, we need cash flow from investing activities and that is my capital expenditure Capital expenditure, I did that in my balance sheet calculations And that's 17.9 However, what kind of cash flow is that? Is it an inflow or an outflow? Well it's expenditure, that's cash leaving my business So I've put a negative sign in the formula to change that to a negative cash flow Cash flow from investing activities? Is the sum of the items above (just that one item) So we've now done a cash flow from investing activities and from operations as well Next onto the financing activities and we start with the increase or decrease in long-term debt I can find this in my balance sheet, here we have long-term debt but now I need to do a bit of thinking Long-term debt was 20 and it's gone up to 30. Is that cash inflow or outflow? That's a cash inflow, although I owe more money (you might think that's a bad thing) If I owe more money, that means I must have borrowed more money. More cash came into my bank, fantastic! It's gone up by 10. So I need a positive 10 to come into my cash flow statement To do that, I will take the 30 minus the 20 and there's my positive 10 Were there any other financing cash flows? Well yes, dividends! Dividends is up near my balance sheet calculations 11.5 It's already a negative, is that an outflow of cash dividends? Yes, dividends are an outflow of cash, 11.5 negative Issuance of equity? Again that's in my balance sheet calculations which was zero. We issued zero So now my cash flow from financing activities (the sum of the three items above) comes to 1.5 negative, great! Now to finish this up, I need to fill in the following orange cells I'm gonna start with ending cash from last year and that will then provide me with the beginning cash from this year I'll then add on the net cash flow from this year, to get to my ending cash and then that figure can go into the balance sheet So let's start with ending cash from last year, so from period 0. That's in my balance sheet at 12.0 If I've got last year's ending cash, that must be this year's beginning cash 12.0 My net cash flow is the sum of the three cash flows categories above Cash flow from operations, cash flow from investing activities and cash flow from financing activities So the net cash flow for this period (period 1) is 18.3 so far. We haven't done operating working capital just yet So my ending cash is the sum of the two items above 30.3 Now if I had completely finished my cash flow statement (if I had done the change in operating working capital calculation) Then this would be a completely finished figure and that could go into the balance sheet and hopefully the balance sheet would balance So apart from the change in operating working capital, that is your cash flow statement done