Operating Cash Flow Demand - OCFD

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DEFINITION

A measure of the amount of operating cash flow needed to meet the capital costs of a company's strategic investments. This value is used to compute the cash value added of a company's strategic investments and operations.

INVESTOPEDIA EXPLAINS

A strategic investment is any investment in a game plan. The operating cash flow demand is the amount of cash flow needed for each strategic investment to have a net present value of zero, or achieve minimum profitability. For example, if a company's strategic investment is the purchase of a plant in a new market, the OCFD would be the minimum amount of cash that the plant would need to generate over its life to meet the return required by investors.


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