NOI and cash flow calculation

Board Topic: Cash Flow Calculation
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Cash Flow Calculation

Posted by: s. roberts Mar 23 2004, 09:43 PM
If I have several rental properties how would I determine cash flow? I have a NI of -$111,000, Dep. exp. of 200,000, and Interest exp. of $180,000. If my CPLTD is $245,000. Would my cash flow be as follows: ($111M)+200M+180M-245M=$14M

So would my overall cash flow be a positive $14M?

Posted by: loanuniverse Mar 23 2004, 11:07 PM
So would my overall cash flow be a positive $14M?

Cash flow is essentially the sum of all the inflows and outflows of cash during a period.

In the case that you describe above, I don’t think your math is right. The way I look at it you got to take a look at the money going out.

Assuming that your net income figure includes the depreciation expense and interest expense, you are right about adding back the depreciation expense since this is a non-cash expense, but I don’t see why you would add the interest expense. That money is gone.

Also when looking at CPLTD, the one that you use should be the one reflected at the beginning of the period that you are analyzing {usually a year}. Not the one shown at the end of the period. Take into consideration that the “Current Portion of Long-Term Debt” is repaid within the next twelve months so if you are looking at a number in the balance sheet as of 12/31/03, that number will be affecting 2004 cash flow not 2003.

If I had to guess, I would say that your cash flow is negative. I just can not figure out how negative it is without finding out if interest expense is included in the operating expenses and already reflected in the net income. It could be very bad, or just bad…. But either way it is bad.

Something else that you should consider:

CPLTD is used mostly for forecasting future cash flow, if you are looking at last years cash flow, then you would be using the one reflected in the balance sheet dated 12/31/2002. However, the best way to look at prior or future cash flows would be by figuring out what the actual mortgage payments are. After all the mortgage payments include principal and interest.

Hope this helps.

Posted by: s. roberts Mar 23 2004, 11:52 PM
Interest is included in my expenses and I am trying to calculate for 2004.


Cash Flow=($156)

Is this correct? Thanks for your help.

Posted by: loanuniverse Mar 24 2004, 06:48 AM
"Cash Flow=($156)"

Yeph that sounds about right.

One last thing: Any amortization expense? If so you can add that one also since it is a non-cash expense.
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