Vareto Finance Glossary

Operating Cash Flow


Operating cash flow (OCF) is a metric used to know how much cash a company can generate from its usual business operations. It is used to gauge whether a company can earn positive cash flow to sustain and grow its operations. In case it is unable to, whether any external financing will be needed for further capital expansion.


Operating cash flow = Net Income + Non-cash Expenses - Increase in Working Capital

Why it matters

If a company's OCF is negative, it means insufficient funds available to run the company's core operations. In such a case, the company may need to borrow funds for maintaining the same. It also offers insight into the sufficiency of cash sources and the company’s operational performance.