Operating Cash Flow Calculator

An operating cash flow calculator works out how much cash a business actually generates from its core trading activities, stripping away the accounting adjustments that sit between profit and cash. You enter net income, depreciation and amortisation, and the change in working capital, and the tool returns operating cash flow using the indirect method. The logic is straightforward. Net income is your starting point, but it has been reduced by non cash charges such as depreciation and amortisation, so those are added back because no cash actually left the business. Then you adjust for the change in working capital, since money tied up in extra inventory or unpaid customer invoices is cash you have earned but not yet collected. In this calculator the change in working capital is the increase over the period, so a rise reduces operating cash flow while a fall releases cash back. This measure matters because it shows whether the day to day business funds itself, which is the foundation of a durable company. A firm reporting solid profits can still struggle if working capital keeps swelling, so watching this figure helps you catch trouble early. Owners, accountants, and analysts use it to compare cash generation across periods and against peers. A few tips help. Use consistent definitions for working capital so your comparisons hold up. Watch the trend rather than a single period, because seasonal swings are normal. If operating cash flow lags profit for several periods, dig into receivables and inventory. Use this tool to test how a change in collections or stock levels moves your cash. All figures are in New Zealand dollars and the result is an estimate to support your own analysis.

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$95,000
Operating cash flow

OCF = net income + depreciation and amortisation - increase in working capital. Estimate only, not financial or tax advice.

How it works

The calculator starts with net income and adds back depreciation and amortisation, because those are non cash charges. It then subtracts the increase in working capital, since cash tied up in inventory or receivables is not yet collected. The result is the cash generated by operations.

Worked example

Starting with net income of $80,000, adding depreciation and amortisation of $25,000 gives $105,000. Subtracting the $10,000 increase in working capital leaves operating cash flow of $95,000.

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Frequently asked questions

What is operating cash flow?

Operating cash flow is the cash a business generates from its normal trading activities. Using the indirect method it starts from net income, adds back non cash charges, and adjusts for changes in working capital. It shows whether operations fund themselves.

Why add back depreciation and amortisation?

Depreciation and amortisation reduce reported profit but no cash actually leaves the business when they are recorded. They are accounting allocations of past spending. Adding them back converts profit closer to a cash basis.

How does working capital affect the result?

An increase in working capital, such as more inventory or unpaid invoices, ties up cash and reduces operating cash flow. A decrease frees cash up and increases it. This calculator treats the input as the increase over the period.