Cash Flow Calculator

Cash flow is the difference between cash coming in (revenue) and cash going out (expenses) in a period. Positive cash flow means you have more coming in than going out. A business can be profitable on paper but fail if it runs out of cash. 'Cash is king' is especially true in Nigeria's volatile economic environment.

Profit is an accounting concept — revenue minus expenses including depreciation and accruals. Cash flow is actual money moving through the business. For example, you may record a sale in December but receive payment in January — profit is recorded in December, cash arrives in January.

Fixed costs stay the same regardless of sales volume: rent, salaries, internet, loan repayments. Variable costs change with revenue: raw materials, commissions, packaging, shipping. In Nigeria, keep fixed costs as low as possible given economic uncertainty — use commission-based sales reps and flexible office arrangements early on.

Break-even revenue = Fixed Costs ÷ Contribution Margin Ratio. Contribution Margin Ratio = (Revenue − Variable Costs) ÷ Revenue = 1 − Variable Cost Ratio. At break-even, your revenue exactly covers all costs with zero profit.

Aim for 3–6 months of operating expenses as a cash reserve. Nigerian businesses face unique risks: naira devaluation, power disruptions increasing generator costs, delayed government payments, and supply chain disruptions. A larger buffer is prudent. Keep reserves in both Naira and USD.