Cash flow after taxes

Cash flow after taxes is the amount of net cash flow relating to operations that remain after all related income tax effects have been included. It is usually calculated by adding back all non-cash charges to net income. Thus, the calculation is:

Cash after taxes = Net income + Depreciation + Amortization + Impairment charges

For example, a business reports $10,000 of net income. It also has $15,000 of depreciation and $5,000 of amortization, which results in cash flow after taxes of $30,000. The calculation is:

$10,000 Net income + $15,000 Depreciation + $5,000 Amortization
= $30,000 Cash flow after taxes

This measurement is a good way to determine whether a business is generating positive cash flows after the effects of income taxes have been included. However, it does not account for cash expenditures to acquire fixed assets.

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