Enter the operating income, depreciation expense, taxes, and the change in working capital to determine the operating cash flow (OCF).

## Operating Cash Flow Formula

The following formula is used to calculate the operating cash flow of a business.

OFC= OI + D – T + CWC

• Where OFC is the oeprating cash flow ($) • OI is the operating income ($)
• D is the depreciation ($) • T is the taxes ($)
• CWC is the change in working capital ($) ## OCF Definition OFC, short for operating cash flow, is a term used in business and finance to describe the amount of cash that is generated by a business’s typical operating. This means the cash flow does not include any cash flows from investments etc unless the core of the business is actually investing. ## OCF Example Problem How to calculate operating cash flow (OCF)? First, determine the total operating income earned through the business’s normal operations. For this example, the business earns a yearly amount of$500,000.00.

Next, determine the depreciation on assets owned by the company. In this case, the business has few depreciation assets, and it only amounts to $40,000.00. Next, determine the taxes that need to be paid on the income. To simplify this example will use a flat rate of$100,000.00 as an example.

Next, determine the change in net working capital. After the year period, the change in working capital is found to be $30,000.00. Finally, calculate the operating cash flow using the formula above: OFC= OI + D – T + CWC OFC=$500,000 + $40,000 –$100,000 + $30,000 OFC=$470,000.00.