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.

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RELATED TERMS
  1. Income

    Money that an individual or business receives in exchange for ...
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  3. Current Liabilities

    A company's debts or obligations that are due within one year. ...
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    1. The degree to which an asset or security can be bought or ...
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