Based on the spreadsheet below, what is the net cash flow?
| | A | B |
|---|------------------------|---------|
| 1 | Cash Inflows | |
| 2 | Disposable income | $2,040 |
| 3 | Interest on deposits | $0 |
| 4 | Income from investments | $0 |
| 5 | Total Cash Inflow | $2,040 |
| 6 | | |
| 7 | Cash outflows | |
| 8 | Rent | $650 |
| 9 | Utilities | $95 |
| 10| Cable and telephone | $75 |
| 11| Groceries | $350 |
| 12| Car payment | $235 |
| 13| Student loan | $110 |
| 14| Insurance | $115 |
| 15| Recreation | $120 |
| 16| Total Cash Outflow | $1,750 |
A. $290
B. $390
C. $1,750
D. $2,040
Answer (2)
The problem provides total cash inflow and total cash outflow.
Net cash flow is calculated by subtracting total cash outflow from total cash inflow.
Perform the subtraction: $2,040 - $1,750 = $290.
The net cash flow is $290 .
Explanation
Understanding the Problem We are given a table of cash inflows and cash outflows and asked to find the net cash flow. The net cash flow is the difference between the total cash inflow and the total cash outflow.
Setting up the Calculation The total cash inflow is given as $2,040. The total cash outflow is given as $1,750. To find the net cash flow, we subtract the total cash outflow from the total cash inflow:
Net Cash Flow = Total Cash Inflow - Total Cash Outflow
Substituting the Values Substituting the given values, we have:
Net Cash Flow = $2,040 - $1,750
Calculating the Result Performing the subtraction, we get:
Net Cash Flow = $290
Final Answer Therefore, the net cash flow is $290 .
Examples
Understanding net cash flow is crucial for managing personal finances. For instance, if you're planning a monthly budget, knowing your net cash flow helps you determine how much money you have available for savings, investments, or discretionary spending after covering all your expenses. A positive net cash flow indicates you're earning more than you're spending, allowing you to build wealth or achieve financial goals more effectively. Conversely, a negative net cash flow signals the need to cut expenses or increase income to avoid debt accumulation.
The net cash flow is calculated by subtracting total cash outflow from total cash inflow. In this case, the calculation shows that the net cash flow is $290, which is the remaining amount after covering all expenses. Thus, the answer is A. $290.
;
