Operating Cash Flow

Operating cash flow

Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements.

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Operating Cash Flow

A ratio of a company's cash flow to either its net income or operating income. The latter ratio provides a more accurate description of a company's profit, while the former takes into account the effects of non-operation transactions on income. Operating cash flow shows the difference, if any, between a company's reported income and actual cash on hand.

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Operating Cash Flow (OCF)

What Does Operating Cash Flow (OCF) Mean?

The cash generated from the operations of a company; generally defined as revenues minus all operating expenses but calculated through a series of adjustments to net income. The OCF can be found on the statement of cash flows. Also known as cash flow provided by operations or cash flow from operating activities. One method of calculating OCF is shown here:

Investopedia explains Operating Cash Flow (OCF)

Operating cash flow is the cash that a company generates as a result of normal business operations. It is arguably a better measure of a business's profits than is earnings because a company can show positive net earnings (on the income statement) and not be able to pay its debts. It is cash flow that pays the bills: OCF also can be used to check on the quality of a company's earnings. If a firm reports record earnings but negative cash, it may be using aggressive accounting techniques.

Related Terms:
• Cash Flow
• Cash Flow Statement
• Operating Expenses
• Operating Income
• Operating Margin