Operating Cash Flow (OCF) is the cash generated by a companys core business operations during a period, before any cash used for investing or financing. It sits at the top of the cash-flow statement.
Formula: OCF = Net Profit + Non-cash Charges (Depreciation, Amortisation) +/- Changes in Working Capital +/- Deferred Tax. Reported directly under the Indirect Method in most Indian filings.
Example: Maruti reports PAT of Rs 13,200 cr, depreciation Rs 3,000 cr, working-capital release Rs 1,800 cr → OCF approximately Rs 18,000 cr.
When to use: Comparing reported profit against actual cash collection. A persistent gap (PAT growing, OCF flat) signals receivables build-up, inventory bloat, or aggressive revenue recognition.
When NOT to use: As a standalone value metric — OCF ignores capex, so a capital-heavy business with high OCF but higher capex still destroys value. Use Free Cash Flow for that.
Caveat: Past performance is not indicative of future returns. OCF is seasonal; always look at trailing-twelve-month or full-year numbers.
Related terms: Free Cash Flow, Working Capital, EPS.