Operating Cash Flow Ratio

AAA

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. Operating Cash Flow - OCF

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

    A class of financial metrics that is used to determine a company's ...
  4. Cash Flow

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

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

    The profit realized from a business' own operations. Income from ...
Related Articles
  1. The Essentials Of Corporate Cash Flow ...
    Retirement

    The Essentials Of Corporate Cash Flow ...

  2. Operating Cash Flow: Better Than Net ...
    Markets

    Operating Cash Flow: Better Than Net ...

  3. Cash Flow On Steroids: Why Companies ...
    Markets

    Cash Flow On Steroids: Why Companies ...

  4. Advanced Financial Statement Analysis
    Options & Futures

    Advanced Financial Statement Analysis

comments powered by Disqus
Hot Definitions
  1. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  2. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  5. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  6. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
Trading Center