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| Operating Cash Flow - OCF |
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The cash generated from the operations of a company, generally defined as revenues less all operating expenses, but calculated through a series of adjustments to net income. The OCF can be found on the statement of cash flows.
Also known as "cash flow provided by operations" or "cash flow from operating activities".
One method of calculated OCF is:
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Operating cash flow is the cash that a company generates through running its business.
It's arguably a better measure of a business's profits than earnings because a company can show positive net earnings (on the income statement) and still not be able to pay its debts. It's cash flow that pays the bills!
You can also use OCF as a check on the quality of a company's earnings. If a firm reports record earnings but negative cash, it may be using aggressive accounting techniques.
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