Posted in Finance, Accounting and Economics Terms, Total Reads: 727
Definition: Cash flow from operations
Also called as Operating Cash Flows (OCF), it is the cash generated by the company’s regular operations or business activities. It is calculated by subtracting the operating expenses from the operating revenues. Another way of representing it is:
It is a good indication of the company’s progress. A new growing firm usually has negative OCF due to huge operating expenses in the initial years whereas a developed firm should ideally have a large positive OCF and should be generating a continuous revenue stream from its daily operations.