OCF Formula: How to Calculate Operating Cash Flow
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Key terms
- Cash FlowThe net amount of cash moving in and out of your accounts. Positive cash flow means you're earning more than you're spending, while negative cash flow indicates you're spending more than you earn.
- Cash Flow Statement (Business)A financial statement that tracks the actual movement of cash in and out of a business over a specific period, organized into operating, investing, and financing activities. Unlike the income statement, which includes non-cash items like depreciation, the cash flow statement shows whether a company is generating enough actual cash to fund operations and growth. Positive cash flow is essential for business survival, even for companies that appear profitable on paper.
- Cash AdvanceBorrowing cash using a credit card at an ATM or bank. Typically charges a higher APR (25%+), immediate interest (no grace period), and a cash advance fee of 3-5%.
- Cash Advance FeeA fee charged for withdrawing cash using a credit card, typically $10 or 3-5% of the advance amount, whichever is greater. A $200 cash advance with 5% fee costs $10.
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