In the present study, a new hull panel generation algorithm, namely panel cutting method, was developed to predict flow phenomena around a ship using the Rankine source potential based panel method, where the iterative method was used to satisfy the nonlinear free surface condition and the trim and sinkage of the ship was taken into account. Numerical computations were performed to investigate the validity of the proposed hull panel generation algorithm for Series 60 ($C_B$=0.60) hull and KRISO container ship (KCS), a container ship designed by Maritime and Ocean Engineering Research Institute (MOERI). The computational results were validated by comparing with the existing experimental data.