A ratio above 1 means the business generates enough cash to pay its short-term obligations without borrowing or selling assets. Because it uses cash rather than accounting profit, it is harder to flatter.
How to use the Operating Cash Flow Ratio Calculator
- Operating cash flow (latest quarter)
- Operating cash flow (previous quarter)
- Operating cash flow (2 quarters ago)
- Operating cash flow (3 quarters ago)
- Current liabilities
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter operating cash flow for each of the last four quarters and current liabilities.
Inputs explained
| Field | What to enter |
|---|---|
| Operating cash flow (latest quarter) | Amount in your currency |
| Operating cash flow (previous quarter) | Amount in your currency |
| Operating cash flow (2 quarters ago) | Amount in your currency |
| Operating cash flow (3 quarters ago) | Amount in your currency |
| Current liabilities | Amount in your currency |
What each result means
- Operating cash flow (TTM) = [Operating cash flow (latest quarter)] + [Operating cash flow (previous quarter)] + [Operating cash flow (2 quarters ago)] + [Operating cash flow (3 quarters ago)]
- Operating cash flow ratio = [Operating cash flow (TTM)]÷[Current liabilities]
Example values
How the main result changes when Operating cash flow (latest quarter) changes and everything else stays at the example values above:
| Operating cash flow (latest quarter) | Operating cash flow ratio (×) |
|---|---|
| 16,000,000 | 1.1 |
| 24,000,000 | 1.19 |
| 32,000,000 | 1.28 |
| 40,000,000 | 1.37 |
| 48,000,000 | 1.46 |
| 64,000,000 | 1.63 |
Formula
Operating cash flow (TTM) = OCF Q1 + Q2 + Q3 + Q4
Operating cash flow ratio = TTM operating cash flow ÷ current liabilities
Worked example
Inputs: Operating cash flow – latest quarter: $32,000,000; Operating cash flow – previous quarter: $28,000,000; Operating cash flow – 2 quarters ago: $30,000,000; Operating cash flow – 3 quarters ago: $25,000,000; Current liabilities: $90,000,000.
Results: Operating cash flow (TTM) = $115,000,000.00; Operating cash flow ratio = 1.28 ×; Liquidity = Cash flow covers current liabilities.
Frequently asked questions
What is a good operating cash flow ratio?
Above 1.0.
How is it different from the current ratio?
It uses cash generated rather than current assets.
Where do I find operating cash flow?
In the cash flow statement.