Operating Cash Flow Ratio

Home Operating Cash Flow Ratio

Operating Cash Flow Ratio

  • 338 Views
  • 04 Feb, 2019

Votes Up

0

Vote Down

0

ANSWERS (5)

An Operating cash flow ratio is the liquidity ratio that measures the performance of the company by considering that how well the company pay off its current liabilities with the cash flow generated from the business operations. The ratio of Operating cash flow can be calculated as - 

 Operating Cash Flow = Cash flow from operations / current liabilities

 

  • 0
  • 0

Operating cash flow can be calculated by dividing the current liabilities from the cash flow operations. Thus it can be found that operating cash flow can be divided into two parts named –

·        Current liabilities – These are the obligations sue within a year. Example of current liabilities are – short term debts, accrued liabilities and accounts payable.

·        Cash flow from operations – These are the statement of cash flows of the company. The cash flow from operations involves net income + changes in working capital + non- cash expenses.

  • 0
  • 0

The operating cash flow ratio measures the short term liquidity of the company. It measures how well the current liabilities of the company are covered by the operations of the company. The good financial health of any company is determined by the high operating cash flow. Further, the operating cash flow is the cash equivalent of net income. It is the type of cash flow which considers the operating expenses for financing the new activities of the business. The cash flow from operations and net income both provides an adequate quality of an enterprise’s earnings.

  • 0
  • 0

  • 0
  • 0

  • 0
  • 0

Add your Answer


Search Here

Latest Reviews

  • Kannon
    13 Jul, 2019

    I asked for essay help from Assignment Help 4 Me and I am happy that the essay writers completed my task on time. The prices they asked for are worth in comparison to the services rendered.

  • Liam
    13 Jul, 2019

    Assignment Help 4 Me is the best help provider. I took assistance to get my essay completed and I am glad that the writers delivered the quality content as they promised within the time committed.

  • Silas
    12 Jul, 2019

    Accounting is a very interesting subject but when it comes to assignment writing, I feel hard to get through the same. But, since the assignments have to be completed somehow, I preferred to avail online help from Assignment Help 4 Me. All thanks to them that they helped me complete my work on time at reasonable prices.

View All Reviews
Assignment Help 4 Me