Definition
Operating cash flow is cash generated (or consumed) by core business operations, including working capital movement (AR/AP/deferred revenue).
How to use it
- Operating cash flow can diverge from operating profit due to working capital.
- Improving collections and payment terms often improves operating cash flow quickly.
Measured as
Measure Operating Cash Flow with the same date, unit basis, and accounting or policy definitions used in the rest of your model.
Operator takeaway
- Operating cash flow can diverge from operating profit due to working capital.
- Improving collections and payment terms often improves operating cash flow quickly.
- Tie Operating Cash Flow to the same balance-sheet date, scenario, and decision memo you are using elsewhere in the model.
- Document which claims, costs, or adjustments your team includes before comparing numbers across forecasts, covenants, or valuation work.
Next decision
- Read Cash conversion cycle: turn working capital into runway if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.
- Decide whether Operating Cash Flow belongs in cash planning, valuation, or debt monitoring so the number is used in the right model.
Where to use this on MetricKit
Guides
- Cash conversion cycle: turn working capital into runway: A practical guide to the cash conversion cycle (CCC): how AR/AP timing changes cash, how to reduce days outstanding, and why runway depends on working capital.
- Runway and burn: gross vs net burn, working capital, and cash levers: A practical guide to runway: compute net burn, understand why cash differs from profit, and how working capital and collections change runway.