The operating cash flow, on the other hand, only accounts for the cash flows of the company’s ordinary activities. If it is negative, this represents a so-called net loss for the year. If the cash flow is positive – that is, if the company has generated sufficient liquid resources – the result is an annual net profit. It indicates how much capital has flowed in or out within a year.Ĭash inflows and outflows are contrasted to determine the company’s liquid funds. Do they both mean the same thing – and if not, how do they differ? Operating cash flow is only one part of a company’s cash flow: the entire cash flow comprises more than that and is just as much a balance sheet ratio for companies. Cash flow or operating cash flow? These are the differencesĬash flow is a familiar term for many, but operating cash flow often is not. This makes this indicator an indispensable instrument for financial controllers and general financial planning and analysis. With the cash flow, the company can evaluate whether it has the sufficient financial resources to carry out new investments. When it comes to controlling spend and keeping business costs at bay, cash flow is one of the most important metrics there is.įor businesses, the key figure of operating cash flow is significant, because if you want to invest and thus remain competitive, you first need the appropriate capital. Or simply put, it shows how much money the company takes in during its normal day-to-day business. With the operating cash flow, the company can identify what amount of liquid assets it generates within a specified period of time – it is, you might say, the balance between cash inflows and cash outflows from ordinary business activities during a certain time. The operating cash flow (abbreviated to OCF) is a key figure from business administration that indicates on the one hand the competitiveness and on the other hand the internal financing capability of a company.
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