Operating Cash Flow Margin


DEFINITION of 'Operating Cash Flow Margin'

A measure of the money a company generates from its core operations per dollar of sales. The operating cash flow can be found on the company's cash flow statement, and the revenue can be found on the income statement. A high operating cash flow margin can indicate that a company is efficient at converting sales to cash, and may also be an indication of high earnings quality.

BREAKING DOWN 'Operating Cash Flow Margin'

Analyzing historical margins gives an investor an idea of a company's long-term trends. Some companies, for example, may require a large influx of outside capital if the cash flow margin begins to trend into negative territory. By focusing on bolstering the operating cash flow margin, the company can rely more on internally generated cash flow rather than debt-to-fund operations.

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  1. 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 >>
  2. Do you discount working capital in net present value (NPV)?

    Net present value (NPV) calculations should include the discounted value of changes in working capital. This treatment of ... Read Full Answer >>
  3. How is working capital different from fixed capital?

    There are several key differences between working capital and fixed capital. Most importantly, these two forms of capital ... Read Full Answer >>
  4. How can working capital affect a company's finances?

    Working capital, or total current assets minus total current liabilities, can affect a company's longer-term investment effectiveness ... Read Full Answer >>
  5. What are working capital costs?

    Working capital costs (WCC) refer to the costs of maintaining daily operations at an organization. These costs take into ... Read Full Answer >>
  6. Do you include working capital in net present value (NPV)?

    Working capital is included in calculating the net present value (NPV) of a company. NPV is the difference between the present ... Read Full Answer >>

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