Cash Generated from Core Business Operations
Cash Generated from Core Business Operations
Operating activities include cash flows directly related to producing and delivering goods or services. Positive operating cash flow generally indicates that a company's core business can generate sufficient cash without relying heavily on borrowing or asset sales.
- Cash received from customers.
- Cash paid to suppliers.
- Cash paid for wages and operating expenses.
- Cash paid for income taxes.
- Interest received and interest paid (operating under U.S. GAAP; classification may vary under IFRS).
- Dividends received (operating under U.S. GAAP).
Note
Consistently negative operating cash flow may indicate operational problems even if reported net income is positive. Under IFRS, interest and dividends received may be classified as operating, investing, or financing, but under U.S. GAAP they are operating.
Summary
Operating cash flow measures the cash-generating ability of the company's primary business activities.