Operating Cash Flow Ratio

See: Cash Flow. See: Operating Cash Flow. See: Operating Cash Flow Margin. They’re the same things, roughly.

You operate a company, and sell stuff to create revenues flowing into the company. You have expenses beneath those revs. Subtract the expenses from the revs and you have cash flow.

The specific issue here is the cash. That is, if you have a company that made $40 million in cash after having spent $100 million on a tractor smelting company that would last 25 years, then the operating cash flow would have to be adjusted. You'd depreciate that $100 mil to the tune of $4 million a year for 25 years.

Pre-tax operating profits then? Add back $96 million, and blammo...it was a great year for the little company that could.