OCF
Operating Cash Flow
Short definition
Operating cash flow is cash generated or consumed by the core business in the period. Indirect method: start from net income, add non-cash charges, subtract ΔNWC. IAS 7 leaves interest classification optional.
Detailed explanation
The indirect method adjusts profit for non-cash items and working-capital movements. The direct method lists collections and payments. A rise in receivables or inventory cuts OCF without cutting profit; a rise in payables lifts OCF — that is supplier finance, not operating quality.
Interest and tax classification as operating or financing breaks peer comparison. A one-off prepayment or destock inflates OCF.
Why it matters for the CFO
It is the first cash measure of liquidity and internal funding. Negative OCF, even in a profitable growth year, requires external finance or a cash buffer. CFADS and FCF are built from this line, but maintenance capex and debt service still sit outside it.
How it is calculated
OCF ≈ Net kâr + Nakit dışı giderler − ΔNWC ± diğer işletme düzeltmeleri
Variables in the formula
- OCF: Operating cash flow
- ΔNWC: Increase in NWC (cash outflow)
How to read it
OCF above net income means accruals converted to cash; the reverse is cash trapped in receivables or stock. Negative OCF in a growth year can be expected; persistence is cash burn. The 13-week budget is OCF at higher frequency, gross collections versus payments.
Numerical example
Net income 44 mn TL, depreciation 20 mn TL, ΔNWC +30 mn TL (increase) → OCF ≈ 44 + 20 − 30 = 34 mn TL (before interest/tax classification).
Related calculators
Güven Sayılgan’s writing on this topic
The Core Messages of Financial Statements for Entrepreneurs
Entrepreneurs need not be accountants, yet they should be able to read the balance sheet, income statement, and cash-flow statement. These statements are fundam
3 min read
Read → FinansThirteen-Week Rolling Cash Budget
A thirteen-week rolling cash budget shows, week by week over roughly the next three months, expected cash inflows and outflows and when financing needs may aris
5 min read
Read → FinansWhen Do Firms in Türkiye Experience Cash Squeezes Most Often?
Cash squeezes are not driven by tax dates alone; interest rates, banks’ appetite to lend, the exchange rate, inventory costs, collection periods, and sales temp
3 min read
Read → FinansThe Working-Capital Illusion: Growing Sales While Going Broke
Rising sales are often treated as a success indicator; in financial management, however, turnover and cash are not the same thing, and growth that cannot be fin
4 min read
Read →Read these first
Related terms
What to learn next
Definitions are educational. They are not investment, credit or tax advice.