# Operating Cash Flow Calculator

URL: https://speedycalculator.com/calculators/finance/operating-cash-flow/
Last updated: 2026-10-25

> The operating cash flow calculator works out cash flow from operations using the indirect method – net income plus non-cash expenses, adjusted for changes in working capital – and the operating cash flow margin.

## Inputs

- Net income
- Depreciation and amortization
- Other non-cash items (stock compensation etc.)
- Increase in accounts receivable
- Increase in inventory
- Increase in accounts payable
- Revenue

## Results

- Operating cash flow
- Operating cash flow margin
- Cash conversion (OCF ÷ net income)

## Formula

```
OCF = net income + depreciation and amortization + other non-cash items − increase in receivables − increase in inventory + increase in payables
```

## Explanation

Operating cash flow shows whether the core business generates cash. If net income is consistently much higher than OCF, profits may depend on accruals.

### How to use the Operating Cash Flow Calculator

- **Net income**
- **Depreciation and amortization**
- **Other non-cash items (stock compensation etc.)**
- **Increase in accounts receivable**
- **Increase in inventory**
- **Increase in accounts payable**
- **Revenue**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter net income, non-cash expenses and the changes in receivables, inventory and payables.

### Tips

- Use consistent periods (a year or a quarter) for flow figures and period-end values for balances.
- Average opening and closing balances when a ratio mixes a flow with a stock.
- Benchmark against competitors in the same industry.
- Read the ratio together with others – profitability, liquidity and efficiency tell different stories.

### Common mistakes to avoid

- Using sales instead of cost of goods sold for inventory ratios.
- Mixing gross, operating and net profit.
- Ignoring one-off items that distort a single year.

### Inputs explained

FieldWhat to enterNet incomeAmount in your currencyDepreciation and amortizationAmount in your currencyOther non-cash items (stock compensation etc.)Amount in your currencyIncrease in accounts receivableAmount in your currencyIncrease in inventoryAmount in your currencyIncrease in accounts payableAmount in your currencyRevenueAmount in your currency

### What each result means

- **Operating cash flow** = [Net income] + [Depreciation and amortization] + [Other non-cash items (stock compensation etc.)] - [Increase in accounts receivable] - [Increase in inventory] + [Increase in accounts payable]
- **Operating cash flow margin** = [Operating cash flow]÷[Revenue]×100
- **Cash conversion (OCF ÷ net income)** = [Operating cash flow]÷[Net income]

### Example values

How the main result changes when **Net income** changes and everything else stays at the example values above:

Net incomeOperating cash flow150,000240,000225,000315,000300,000390,000375,000465,000450,000540,000600,000690,000

## Worked example

Inputs — Net income: $300,000; Depreciation and amortization: $120,000; Other non-cash items (stock compensation etc.): $20,000; Increase in accounts receivable: $40,000; Increase in inventory: $25,000; Increase in accounts payable: $15,000; Revenue: $2,000,000.

Results — **Operating cash flow = $390,000.00**; Operating cash flow margin = 19.5 %; Cash conversion (OCF ÷ net income) = 1.3.

## FAQ

**What is operating cash flow?**
Cash generated by a company's normal business operations.

**Why is depreciation added back?**
It's an expense that doesn't use cash.

**Is higher OCF than net income good?**
Generally yes – earnings are backed by cash.

**What formula does the Operating Cash Flow Calculator use?**
OCF = net income + depreciation and amortization + other non-cash items − increase in receivables − increase in inventory + increase in payables.


## Sources

- [Corporate Finance Institute – financial ratios](https://corporatefinanceinstitute.com/)