what is operating cash flow ocf 
operating cash flow ocf is cash generated by a company s normal business operations it helps determine whether a company generates sufficient positive cash flow to maintain and grow its operations without external financing a company s statement of cash flows includes three types of cash flows operating investing and financing operating cash flows measure the inflows and outflows related to a company s main business activities such as selling and purchasing inventory providing services and paying salaries any investing and financing transactions such as borrowing buying capital equipment and making dividend payments are excluded investopedia dennis madambaaccounting for operating cash flow ocf operating cash flow represents the cash impact of a company s net income ni from its primary business activities operating cash flow also referred to as cash flow from operating activities is the first section of the cash flow statement operating cash flow provides a clear picture of the reality of the business operations for example a large sale boosts revenue but if the company is having difficulty collecting the cash the sale is not a true benefit for the company on the other hand a company may generate high amounts of operating cash flow but report low net income if it has a lot of fixed assets and uses accelerated depreciation calculations a company not bringing in enough money from core business operations may need to find temporary external funding through financing or investing however this is unsustainable in the long run operating cash flow helps assess the financial stability of a company s operations the operating cash flow section can be presented under generally accepted accounting principles gaap by the indirect or direct method if the direct method is used the company must still perform a separate reconciliation to the indirect method 12the operating cash flow ratio represents a company s ability to pay its debts with its existing cash flows it is determined by dividing operating cash flow by current liabilities a ratio greater than 1 0 indicates that a company is in a strong position to pay its debts without incurring additional liabilities 