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Operating Cash Flow Ratio Calculator

Written by:
PK

Below is an operating cash flow ratio calculator which estimates how many times over a company could pay off current liabilities in a given period using only operating cash flows. Enter a company's operating cash flow and current liabilities to compute the ratio.

Operating Cash Flow Ratio Calculator

What is the operating cash flow ratio?

The operating cash flow ratio shows the multiple of times a company could pay off its current liabilities using cash flows from a given period. Unlike balance sheet based liquidity ratios like the quick ratio and current ratio, the cash flow ratio shows how quickly the company could pay off its short term debts with new money coming in (both held static).

A value below 1 – especially if you are looking at a year of cash flows – could mean the company will need to find other means to pay short term debt. Note that large capital expenditures paid in the current period can temporarily depress the ratio, however. You should normalize your cash flows to determine how well current liabilities are covered by cash flow.

Operating Cash Flow Ratio Formula

The operating cash flow ratio formula is:

operating\ cash\ flow\ ratio=\frac{operating\ cash\ flow}{current\ liabilities}

Where:

  • Operating Cash Flow – Cash flow from operations, on the Cash Flow Statement.
  • Current Liabilities – Liabilities and leases/rent due in the near term, from the Balance Sheet.

Other Liquidity Calculators

Liquidity ratios and calculations guess how well a company can deal with its current debt and liabilities. See more liquidity tools here:

      

PK

PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK is in his mid-30s and works and lives in the Bay Area with his wife, two kids, and dog.

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