Operating Cash Flow Measure

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An Operating Cash Flow Measure is a cash flow measure of the amount of cash a company generates from the revenues it brings in, excluding costs associated with long-term investment on capital items or investment in securities.



References

2016

  • (Wikipedia, 2016) ⇒ https://en.wikipedia.org/wiki/operating_cash_flow Retrieved:2016-10-7.
    • In financial accounting, operating cash flow (OCF), cash flow provided by operations, cash flow from operating activities (CFO) or free cash flow from operations (FCFO), refers to the amount of cash a company generates from the revenues it brings in, excluding costs associated with long-term investment on capital items or investment in securities. [1] 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. [2] 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 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
    • (1): operating: Variations of Assets Suppliers and Clients accounts will be disclosed in the Financial Cash Flow

      (2): Cost of Sales = Stock Out for sales. It is Cash Neutral. Cost of Sales - Stock Variation = Stock out - (Stock out - Stock In)= Stock In = Purchase of goods: Cash Out

  1. Ross, Stephen, Randolf Westerfield and Bradford Jordan Fundamentals of Corporate Finance
  2. International Accounting Standards 7, Cash Flow Statements (January 2007)

2015