How to Calculate Retained Cash Flow

by Luke Arthur; Updated September 26, 2017

When you need to gauge the potential financial success of a company, the amount of cash that it has on hand is one factor to consider. Retain cash flow is a metric that looks at the net increase or decrease of cash that a company holds from one period to the next. If you want to calculate this statistic, get a copy of the statement of cash flows from the previous two accounting periods and it should give you the information you need.

Step 1

Obtain a copy of the statement of cash flows from the company that you want to evaluate. This information is typically available on the company's website or if it is a publicly traded company, it is available through the United States Securities & Exchange Commission. Get a copy of the statement of cash flows from the most recent period as well as from the previous period.

Step 2

Locate the amount of cash flow before any items are subtracted out.

Step 3

Subtract the dividends paid out of the cash flow amount for each statement.

Step 4

Determine the difference between the figures from the two statements. For example, if you get $200,000 after subtracting out the dividends from the most recent statement and $150,000 after subtracting out the dividends from the second statement, the difference is $50,000. This tells you that you have a positive amount of $50,000 in retained cash flow.

About the Author

Luke Arthur has been writing professionally since 2004 on a number of different subjects. In addition to writing informative articles, he published a book, "Modern Day Parables," in 2008. Arthur holds a Bachelor of Science in business from Missouri State University.

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