Enter the initial balance value in your currency.
Enter the total income value in your currency.
Enter the total expenses value in your currency.
History:

Explanation

What is Cash Surplus/Deficit Analysis?

Cash surplus or deficit analysis is a financial assessment that helps individuals and businesses understand their financial health by evaluating the difference between their income and expenses. A cash surplus occurs when income exceeds expenses, while a cash deficit occurs when expenses surpass income.

How to Calculate Cash Surplus/Deficit?

The cash surplus or deficit can be calculated using the following formula:

Final Balance (B):

§§ B = Initial Balance + Total Income - Total Expenses §§

where:

  • § B § — final balance
  • § Initial Balance § — the amount of money you start with
  • § Total Income § — the total amount of money received
  • § Total Expenses § — the total amount of money spent

Surplus/Deficit (S):

§§ S = B - Initial Balance §§

where:

  • § S § — surplus or deficit
  • § B § — final balance
  • § Initial Balance § — the amount of money you start with

Income to Expenses Ratio (R):

§§ R = \frac{Total Income}{Total Expenses} \times 100 §§

where:

  • § R § — income to expenses ratio
  • § Total Income § — the total amount of money received
  • § Total Expenses § — the total amount of money spent

Example Calculation

  1. Initial Balance: $1,000
  2. Total Income: $2,000
  3. Total Expenses: $1,500

Final Balance Calculation:

§§ B = 1000 + 2000 - 1500 = 1500 §§

Surplus Calculation:

§§ S = 1500 - 1000 = 500 §§

Income to Expenses Ratio Calculation:

§§ R = \frac{2000}{1500} \times 100 \approx 133.33% §§

In this example, you have a cash surplus of $500, and your income is approximately 133.33% of your expenses.

When to Use the Cash Surplus/Deficit Analysis Calculator?

  1. Personal Finance Management: Track your monthly income and expenses to ensure you are living within your means.

    • Example: Assessing your budget to avoid overspending.

  2. Business Financial Planning: Evaluate the financial health of your business by analyzing cash flow.

    • Example: Determining if your business is generating enough income to cover its expenses.

  3. Investment Decisions: Understand your cash position before making investment choices.

    • Example: Ensuring you have enough surplus to invest in new opportunities.

  4. Loan Applications: Provide a clear picture of your financial situation when applying for loans.

    • Example: Demonstrating your ability to repay a loan based on your cash flow.

  5. Savings Goals: Set and track savings goals based on your surplus.

    • Example: Planning for a vacation or a major purchase.

Practical Examples

  • Household Budgeting: A family can use this calculator to analyze their monthly cash flow, ensuring they save for future expenses like education or home repairs.
  • Freelancer Income Tracking: A freelancer can assess their income and expenses to determine if they are on track to meet their financial goals.
  • Startup Financial Assessment: A startup can evaluate its initial funding against operational costs to ensure sustainability.

Key Terms

  • Initial Balance: The amount of money available at the start of the analysis period.
  • Total Income: The sum of all money received during the analysis period.
  • Total Expenses: The sum of all money spent during the analysis period.
  • Surplus: The amount by which income exceeds expenses.
  • Deficit: The amount by which expenses exceed income.
  • Income to Expenses Ratio: A percentage that indicates how much income is generated for every dollar spent.

Use the calculator above to input your values and dynamically see your cash surplus or deficit. The results will help you make informed financial decisions based on your current cash flow situation.