Initial cash flow refers to the cash flow at the beginning of investment, which generally includes the following parts:

1. Investment in fixed assets. Including the purchase and construction costs, transportation costs and installation costs of fixed assets.

2. Current assets investment. Including investment in current assets such as materials, products, finished products and cash.

3. Other investment expenses. Refers to employee training fees, negotiation fees, registration fees, etc. Related to long-term investment.

4. Income from price changes of original fixed assets. This mainly refers to the cash income from selling the original fixed assets when the fixed assets are updated.

Second, the business process

Cash flow refers to the amount of cash inflow and outflow brought by production and operation during the life cycle after the investment project is put into use. This cash flow is generally calculated on an annual basis. Cash inflow here generally refers to operating cash income.

Cash outflow refers to operating cash expenditure and taxes paid. If the annual sales income of an investment project is equal to the operating cash income. Cash expenditure (excluding depreciation non-cash expenditure) is equal to operating cash expenditure. Then, the annual net operating cash flow (NCF) can be calculated by the following formula:

Annual net cash flow (NCF)= operating income-cash cost-income tax or annual net cash flow (NCF)= net profit ten depreciation or annual net cash flow (NCF)= operating income x( 1- income tax rate)-cash cost x( 1- income tax rate)+depreciation x income tax rate.

Third, end the traffic.

Termination of cash flow refers to the cash flow at the end of the investment project, which mainly includes:

1, residual value or income of fixed assets.

2. Recover the funds originally paid to various current assets.

3. Stop using land price income, etc.

Extended data

influencing factor

1. The increase or decrease of cash items will not affect the change of net cash flow. For example, withdrawing cash from the bank, depositing cash in the bank, and buying bonds due in two months with cash are all internal capital conversion between cash items, which will not increase or decrease cash flow.

2. The increase or decrease of non-cash items will not affect the change of net cash flow. For example, paying debts with fixed assets, investing abroad with raw materials, paying debts with inventories, and investing abroad with fixed assets. They all belong to the increase or decrease of non-cash items, do not involve cash receipt and payment, and will not increase or decrease cash flow.

3. The increase or decrease between cash items and non-cash items will affect the change of net cash flow. For example, paying for purchased raw materials in cash, investing in foreign countries in cash, and recovering long-term bonds. Both of them involve the increase and decrease between cash items and non-cash items, which will cause cash inflow or cash expenditure.

Source: Baidu Encyclopedia-Cash Flow