Operating Cash Flow
Proxy: OCF divided by Total Assets
Definition & Description
Net cash flow generated purely from core business activities, excluding financing or investing effects.
How to Use (Panel Data)
Used to test earnings quality; net income much higher than operating cash flow is an indication of earnings management.
Full Explanation Article
Crucial for analyzing true liquidity.
Profits not accompanied by cash inflows pose a risk of default.
Related Reference Journals
- [1]Dechow, P. M., & Dichev, I. D. (2002). The Quality of Accruals and Earnings.
Research Ideas
The relationship between operating cash flow and accruals in detecting financial statement fraud.
Frequently Asked Questions (FAQ)
What is the difference between this proxy and regular accounting variables?
For detailed information about this proxy, please refer to the article above. NgepetData can automatically extract the required data from your PDF Annual Report.
Where does the data come from to calculate this proxy?
For detailed information about this proxy, please refer to the article above. NgepetData can automatically extract the required data from your PDF Annual Report.
Can this proxy be used for all industry sectors?
For detailed information about this proxy, please refer to the article above. NgepetData can automatically extract the required data from your PDF Annual Report.