How to Calculate Year 0 Cash Flow

by D. Laverne O'Neal

Investing can prove a heady pursuit. Buying shares in an established, even blue-chip, company gives you a vested interest in the company's finances, making you feel like you're owning a piece of the rock, so to speak, and realizing an American dream. Investing in younger organizations is considered a higher-risk activity, though it might lead to more significant profits. Examining a young company's financials is key to making sound investment decisions. Deriving the year 0 cash flow figure from available data is simple.

1. Get access to the company's financial data, either through the company website, prospectus, shareholder report or financial news source.

2. Find out what the initial investment in the business was. In this example, the initial investment figure is $80,000.

3. Deduct the initial investment figure from zero. 0 minus $80,000 equals -$80,000. The Year 0 cash flow is -$80,000.

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