1. What is Net Increase in Cash?

Net Increase in Cash (NIC) represents the total change in a company's cash position during a specific period. It's calculated by summing cash flows from three activities: investing (CFI), operations (CFO), and financing (CFF).

2. How Does the Calculator Work?

The calculator uses the NIC formula:

Where:

• \( CFI \) — Cash Flow from Investing activities
• \( CFO \) — Cash Flow from Operating activities
• \( CFF \) — Cash Flow from Financing activities

Explanation: This calculation shows the net effect of all cash movements in and out of the business across all activities.

3. Importance of NIC Calculation

Details: NIC is a crucial indicator of a company's financial health, showing whether the business is generating or consuming cash overall. It helps investors and analysts assess liquidity and cash management effectiveness.

4. Using the Calculator

Tips: Enter the cash flow values from each activity category in dollars. Positive values represent cash inflows, negative values represent cash outflows.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between NIC and net income?
A: Net income is an accrual accounting concept, while NIC reflects actual cash movements. They can differ significantly due to non-cash items and timing differences.

Q2: Can NIC be negative?
A: Yes, a negative NIC indicates the company used more cash than it generated during the period, which may signal financial challenges.

Q3: How often should NIC be calculated?
A: Typically calculated quarterly and annually as part of financial statement preparation and analysis.

Q4: What activities are included in each cash flow category?
A: CFO includes day-to-day business operations; CFI includes asset purchases/sales; CFF includes debt and equity transactions.

Q5: How does NIC relate to the cash flow statement?
A: NIC is the bottom line of the cash flow statement, showing the net change in cash and cash equivalents during the period.