Operating Cash Flow (OCF) Calculator

Operating cash flow (OCF) is the net cash a company generates from its core operating activities in a period, e.g. selling goods or services minus payments to suppliers, employees, and tax. OCF differs from net income because net income is computed on an accrual basis and includes non-cash charges. Indirect-method example: net income of Rp400 million plus depreciation and amortization of Rp100 million minus a net working capital increase of Rp50 million gives OCF of Rp450 million. Mode 1 of the calculator above uses this computation.

The formula: OCF = net income + depreciation and amortization - net working capital increase. Depreciation and amortization are added back because they reduce profit but do not spend cash. Working capital increases are subtracted because cash is tied up in receivables or inventory. Example: Rp400 million + Rp100 million - Rp50 million = OCF Rp450 million. Mode 2 computes the working capital increase from its components one by one.

When receivables rise, sales are recorded but cash not yet received, so cash decreases. When inventory rises, cash has gone out to buy stock. Conversely when payables rise, the company delays payments to suppliers so cash is retained longer. Example: a receivables increase of Rp30 million + an inventory increase of Rp40 million - a payables increase of Rp20 million = a net working capital increase of Rp50 million, so OCF = Rp400 million + Rp100 million - Rp50 million = Rp450 million. Mode 2 of the calculator above uses this sign logic.

OCF measures cash from operations before capital expenditure, while free cash flow (FCF) = OCF - capital expenditure, i.e. the cash remaining after the company pays for fixed assets like machinery or buildings. This calculator computes OCF as the final result; to continue from OCF to FCF, use the free cash flow calculator at /tools/free-cash-flow/. The two use OCF in different roles, so the results do not overlap.

OCF margin = OCF divided by revenue x 100 percent, measuring how efficiently sales are converted into operating cash. Example: OCF of Rp450 million from revenue of Rp2,000 million gives a 22.5% margin. Mode 3 compares two companies: e.g. company A with a 22.5% margin and company B with a 15% margin, so A converts its sales into operating cash more efficiently. This comparison is descriptive and not an investment viability assessment.

Reverse the formula: required net income = target OCF - depreciation and amortization + net working capital increase. Example: a target OCF of Rp450 million with depreciation of Rp100 million and a working capital increase of Rp50 million requires net income of Rp400 million. Conversely, the maximum working capital increase still reaching the target = net income + depreciation - target OCF; with net income of Rp400 million the result is Rp50 million. Mode 4 of the calculator above computes both directions.

OCF is often an input to other ratios, e.g. the cash flow to debt ratio (OCF divided by total debt) to see the ability to pay obligations from operating cash. This calculator computes OCF as the result via the indirect method; to use OCF as an input to a debt ratio, use the cash flow to debt calculator at /tools/cash-flow-to-debt/. All results on this page are educational estimates, not accounting or financial advice.