Operating Cash Flow Ratio

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DEFINITION of 'Operating Cash Flow Ratio'

A measure of how well current liabilities are covered by the cash flow generated from a company's operations.

Formula:

Operating Cash Flow Ratio

INVESTOPEDIA EXPLAINS 'Operating Cash Flow Ratio'

The operating cash flow ratio can gauge a company's liquidity in the short term. Using cash flow as opposed to income is sometimes a better indication of liquidity simply because, as we know, cash is how bills are normally paid off.

RELATED TERMS
  1. Income

    Money that an individual or business receives in exchange for ...
  2. Cash Flow

    1. A revenue or expense stream that changes a cash account over ...
  3. Current Liabilities

    A company's debts or obligations that are due within one year. ...
  4. Income From Operations - IFO

    The profit realized from a business' own operations. Income from ...
  5. Liquidity

    1. The degree to which an asset or security can be bought or ...
  6. Operating Cash Flow - OCF

    In accounting, a measure of the amount of cash generated by a ...
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