1. What is Operating Cash Flow?

Operating Cash Flow (OCF) is the cash generated from normal business operations. It indicates whether a company can generate sufficient positive cash flow to maintain and grow operations, or whether it may require external financing.

2. How Does the Calculator Work?

The calculator uses the Operating Cash Flow formula:

Where:

• \( EBIT \) — Earnings Before Interest and Taxes (USD)
• \( Depreciation \) — Depreciation expense (USD)
• \( Taxes \) — Taxes paid (USD)

Explanation: This formula starts with EBIT (operating profit), adds back non-cash expenses like depreciation, and subtracts cash taxes paid.

3. Importance of OCF Calculation

Details: Operating cash flow is a key indicator of financial health. Positive OCF means the company can fund operations without external financing, while negative OCF may signal financial trouble.

4. Using the Calculator

Tips: Enter EBIT, Depreciation, and Taxes in USD. All values must be positive numbers. The calculator will compute the Operating Cash Flow.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between OCF and net income?
A: OCF focuses on actual cash generated, while net income includes non-cash items and financing activities.

Q2: Why add back depreciation?
A: Depreciation is a non-cash expense that reduces net income but doesn't affect cash flow.

Q3: How often should OCF be calculated?
A: Typically calculated quarterly with financial statements, but can be computed monthly for internal tracking.

Q4: What's a good OCF?
A: Positive OCF is essential, but "good" depends on industry and company size. Compare to capital expenditures.

Q5: Can OCF be negative?
A: Yes, especially for growing companies investing heavily in operations, but sustained negative OCF is concerning.