Cash generated by core operations. The Operating Cash Flow Calculator takes net income, depreciation and other non-cash charges, increase in working capital (negative if it fell), revenue and returns operating cash flow plus operating cash flow margin, cash flow to net income. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Financial ratios are only useful in comparison: against last year, against a competitor, or against the benchmark for your industry. Take the figures from the same set of accounts, note whether they are yearly or monthly, and read each ratio alongside the others in its family. Use the worked example below to check the maths against your own figures.
How the Operating Cash Flow Calculator works
Operating cash flow starts from accounting profit and adds back expenses that did not use cash (depreciation, amortisation, provisions), then subtracts the cash tied up in growing receivables and inventory. A ratio to net income well below 1 for several periods means profit is not turning into cash.
Worked example
With the example values (net income of $120,000, depreciation and other non-cash charges of $30,000, increase in working capital (negative if it fell) of $15,000, revenue of $900,000), the operating cash flow is $135,000.00; operating cash flow margin 15%, cash flow to net income 1.12x. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is operating cash flow calculated?
operating cash flow = net income + non-cash charges − increase in working capital.
Which figures do I need?
Net income, depreciation and other non-cash charges, increase in working capital (negative if it fell), revenue. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
What is a good value for this ratio?
Benchmarks differ by industry, size and business model, so compare with companies like yours and with your own history. A ratio moving in the wrong direction for several periods matters more than any single number.
