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Operating Cash Flow Ratio

Calculate operating cash flow ratio.

Operating Cash Flow Ratio Calculator

Calculate Operating Cash Flow Ratio

$

Cash generated from core business operations

$

Short-term debts due within one year

Results

Operating Cash Flow Ratio

Enter values above to calculate the operating cash flow ratio

Formula & Calculation

Formula

Operating Cash Flow Ratio = Operating Cash Flow ÷ Current Liabilities

Components:

  • Operating Cash Flow: Cash generated from normal business operations
  • Current Liabilities: Short-term debts due within one year

Interpretation Guide

Poor (< 0.25)
Low ability to cover current liabilities
Fair (0.25 - 0.40)
Moderate liquidity position
Good (> 0.40)
Strong cash flow to cover obligations

Understanding Operating Cash Flow Ratio

Key Benefits

  • Measures actual cash generation vs obligations
  • Indicates operational efficiency
  • Shows short-term liquidity strength
  • Less affected by accounting practices

Important Considerations

  • Varies significantly by industry
  • Seasonal businesses may show volatility
  • Should be analyzed with other ratios
  • Compare across multiple periods

Example Calculations

Strong Company

Operating Cash Flow: $800,000

Current Liabilities: $1,200,000

Ratio: 0.67 (Good)

Average Company

Operating Cash Flow: $300,000

Current Liabilities: $1,000,000

Ratio: 0.30 (Fair)

Struggling Company

Operating Cash Flow: $150,000

Current Liabilities: $800,000

Ratio: 0.19 (Poor)

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v1.0.0.758733