Operating Cash Flow Calculator
Calculate the real cash generated from your business operations
Calculate Operating Cash Flow
Company's net profit from income statement
Non-cash depreciation expense to add back
Non-cash amortization expense to add back
Positive = increase in inventory (cash outflow)
Positive = increase in receivables (cash outflow)
Positive = increase in payables (cash inflow)
Actual cash used for tax payments
Stock compensation, deferred revenue, etc.
Operating Cash Flow Results
Formula: OCF = Net Income + Depreciation + Amortization + Change in Working Capital + Income Tax Payable + Other Cash Flows
Working Capital Change: -$0 (Inventory) - $0 (AR) + $0 (AP)
Cash Flow Analysis
Example: Fortinet (2019)
Financial Data
Net Income: $326.5M
Depreciation + Amortization: $61.6M
Stock-based compensation: $174.1M
Deferred revenue: $446.7M
Change in inventory: -$48.5M
Change in accounts receivable: -$96.7M
Change in accounts payable: $7.7M
Income tax payable: -$18.8M
Calculation
OCF = $326.5M + $61.6M + (-$137.5M) + (-$18.8M) + $576.2M
Operating Cash Flow = $808M
Note: Working capital change = -$48.5M - (-$96.7M) + $7.7M = -$137.5M
Operating Cash Flow Components
Net Income
Starting point from income statement
Non-cash Expenses
Add back depreciation & amortization
Working Capital
Adjust for inventory, AR, and AP changes
Other Items
Tax payments & other cash flows
Working Capital Impact
Cash Outflows (Negative)
- • Increase in inventory
- • Increase in accounts receivable
- • Decrease in accounts payable
Cash Inflows (Positive)
- • Decrease in inventory
- • Decrease in accounts receivable
- • Increase in accounts payable
OCF Analysis Tips
Positive and growing OCF indicates business health
OCF > Net Income shows strong cash conversion
Negative OCF may signal cash flow problems
Use OCF for debt coverage analysis
Understanding Operating Cash Flow
What is Operating Cash Flow?
Operating Cash Flow (OCF) represents the real cash a company generates from its core business operations. Unlike net income, OCF shows actual cash inflows and outflows, providing a clearer picture of a company's financial health and ability to generate cash.
Why is OCF Important?
- •Shows real cash generation from operations
- •More reliable than net income for assessing business health
- •Essential for debt service capacity analysis
- •Helps predict future company growth
OCF Formula Components
OCF = Net Income + Non-cash Expenses + ΔOWC + Tax Payable + Other CF
- Net Income: Profit from income statement
- Non-cash Expenses: Depreciation, amortization
- ΔOWC: Change in operating working capital
- Tax Payable: Actual cash paid for taxes
- Other CF: Stock compensation, deferred revenue
Key Insight: OCF adjusts net income for non-cash items and working capital changes to show real cash generation.