Operating cash flow
AccountingDefinition
Cash generated by a company's core business activities — collecting from customers, paying suppliers and employees. Top section of the cash flow statement.
Differs from net income because of non-cash items (depreciation), working capital changes (AR, inventory, AP), and stock-based compensation. Companies with operating cash flow consistently above reported net income are higher-quality. Reverse pattern signals earnings management or working capital deterioration.
Differs from net income because of non-cash items (depreciation), working capital changes (AR, inventory, AP), and stock-based compensation. Companies with operating cash flow consistently above reported net income are higher-quality. Reverse pattern signals earnings management or working capital deterioration.