Operating cash flow: Difference between revisions

Revision as of 14:26, 21 May 2013

Revision as of 04:25, 4 February 2014

Line 1:

In [[financial accounting]], '''operating cash flow''' (OCF), '''cash flow provided by operations''' or '''cash flow from operating activities''' (CFO), refers to the amount of [[cash]] a [[company]] generates from the [[revenue]]s it brings in, excluding [[cost]]s associated with long-term [[investment]] on [[Financial capital|capital]] items or investment in [[securities]].<ref>Ross, Stephen, Randolf Westerfield and Bradford Jordan '''Fundamentals of Corporate Finance'''</ref> The International Financial Reporting Standards defines operating cash flow as cash generated from operations less taxation and interest paid, investment income received and less dividends paid gives rise to operating cash flows.<ref>International Accounting Standards 7, Cash Flow Statements (January 2007)'''</ref> To calculate cash generated from operations, one must calculate cash generated from customers and cash paid to suppliers. The difference between the two reflects cash generated from operations.

Cash generated from ''operating'' customers

* revenue as reported

* - increase (decrease) in [[''operating'' accounts receivable|''operating'' trade receivables]] (1)

* - investment income (Profit on asset Sales, disclosed separately in Investment Cash Flow)

* - other income that is non cash and/or non sales related

Cash paid to ''operating'' suppliers

* [[cost of goods sold|costs of sales]]- Stock Variation = Purchase of goods. (2)

* + all other expenses

* - increase (decrease) in [[''operating'' accounts payable|''operating'' trade payables]] (1)

Line 24:

== See also ==

* [[EBITDA]]

* [[Cash flow]]

* [[Cash flow statement]]

* [[Free cash flow]]

* [[wikinvest:Operating Cash Flow|Operating Cash Flow at Wikinvest]]

==References==