Operating Cash Flow (OCF)

Definition: Operating Cash Flow (OCF), also called Cash Flow from Operations or Cash Flow from Operating Activities, is the cash a company generates from its n…

Operating Cash Flow (OCF), also called Cash Flow from Operations or Cash Flow from Operating Activities, is the cash a company generates from its normal business operations during a period. It is reported as a separate section of the Statement of Cash Flows under both ASC 230 and IAS 7. Two presentation methods are allowed: the Direct Method (lists actual cash receipts and payments) and the Indirect Method (starts with Net Income and adjusts for non-cash items like depreciation/amortization and changes in working capital). OCF is the numerator of the Operating Cash Flow Ratio (OCF / Current Liabilities) and the starting point for Free Cash Flow.