Operating Cash Flow Margin

What is an 'Operating Cash Flow Margin'

An operating cash flow margin is
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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  4. Why do analysts look at operating cash flow?

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  5. What is the difference between cash flow and revenue?

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