Editing Operating cash flow (section)

{{Short description|Metric in financial accounting}}
In [[financial accounting]], '''operating cash flow''' (OCF), '''cash flow provided by operations''', '''cash flow from operating activities''' (CFO) or '''free cash flow from operations''' (FCFO), refers to the amount of [[cash]] a [[company]] generates from the [[revenue]]s it brings in, excluding [[cost]]s associated with long-term [[investment]] on [[Financial capital|capital]] items or investment in [[securities]].<ref>Ross, Stephen, Randolf Westerfield and Bradford Jordan '''Fundamentals of Corporate Finance'''</ref> Operating activities include any spending or sources of cash that’s involved in a company’s day-to-day business activities.<ref name=":0">{{Cite web|date=2021-01-21|title=Financial Dictionary|url=https://kerneltools.com/post/financial-dictionary-accounting-terminology/|access-date=2021-02-24|website=Kernel|language=en-GB}}</ref> The International Financial Reporting Standards defines operating cash flow as cash generated from operations, less [[tax]]ation and [[interest]] paid, gives rise to operating cash flows.<ref>'''International Accounting Standards 7, Cash Flow Statements (January 2007)'''</ref> To calculate cash generated from operations, one must calculate cash generated from customers and cash paid to suppliers. The difference between the two reflects cash generated from operations.

Cash generated from ''operating'' customers:
* revenue as reported
* &minus; increase (decrease) in [[''operating'' accounts receivable|''operating'' trade receivables]] (1)
* &minus; investment income (Profit on asset Sales, disclosed separately in Investment Cash Flow)
* &minus; other income that is non cash and/or non sales related

Cash paid to ''operating'' suppliers:
* [[cost of goods sold|costs of sales]] &minus; Stock Variation = Purchase of goods. (2)
* + all other expenses
* &minus; increase (decrease) in [[''operating'' accounts payable|''operating'' trade payables]] (1)
* &minus; non cash expense items such as [[depreciation]], provisioning, impairments, [[bad debt]]s, etc.
* &minus; financing expenses (disclosed separately in Finance Cash Flow)

Notes
# ''Operating'':  Variations of Assets Suppliers and Clients accounts will be disclosed in the Financial Cash Flow
# Cost of Sales = Stock Out for sales. It is Cash Neutral. Cost of Sales &minus; Stock Variation = Stock out &minus; (Stock out &minus; Stock In) = Stock In = Purchase of goods: Cash Out