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

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BREAKING DOWN '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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    A company's debts or obligations that are due within one year. ...
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RELATED FAQS
  1. What metrics can be used when evaluating a telecommunications company to ensure its ...

    Cash flow analysis has been transformed since the widespread introduction of statements of cash flow, and investors have ... Read Full Answer >>
  2. What is the difference between the operating the operating cash flow ratio and operating ...

    The operating cash flow ratio and the operating cash flow margin are different ratios used in fundamental analysis. The operating ... Read Full Answer >>
  3. What is the difference the operating cash flow ratio and solvency ratio?

    The operating cash flow ratio and the solvency ratio are two different measures used in fundamental analysis of a company. ... Read Full Answer >>
  4. How can I calculate the operating cash flow ratio on Excel?

    The operating cash flow ratio measures a company's short-term liquidity by relating its operational cash flow to its current ... Read Full Answer >>
  5. What does the operating cash flow ratio measure?

    The operating cash flow ratio measures a company's ability to meet its short-term, or current, liabilities, also known as ... Read Full Answer >>
  6. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>

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