Operating Cash Flow

Operating cash flow is the cash a company's core business actually generated during the period, reported in the first section of the cash flow statement. It starts from net income and unwinds the accounting: non-cash charges like depreciation and stock-based compensation get added back, and changes in working capital get added or subtracted depending on whether they trapped or released cash.

OCF is the reality check on earnings. A company reporting $100M of net income against $20M of operating cash flow is booking profits it has not collected, and sustained gaps like that are the signature of aggressive revenue recognition. Accrual measures like the Sloan ratio are built on exactly this comparison.

It is also the top half of free cash flow: OCF minus capital expenditures is the cash actually available to shareholders and creditors.