How is Operating Cash Flow defined?

Operating Cash Flow is defined as the cash flow generated from normal business operations. This measure reflects the cash that a company generates from its core business activities, excluding any cash flows that come from investments or financing activities. Operating Cash Flow is essential because it indicates whether a company can generate sufficient cash to keep the business running and fund future growth.

This metric typically captures cash received from customers and cash paid to suppliers and employees, providing insight into the company’s operational efficiency and financial health. Understanding Operating Cash Flow is crucial for stakeholders, as it allows them to assess the company’s ability to maintain its operations, pay dividends, and make further investments without relying on external financing.

The other options do not accurately represent Operating Cash Flow, as they pertain to different financial concepts, such as cash from investments, asset ratios, or income divided by debt service, rather than cash generated solely from core operational activities.