financial-metrics
Operating cash flow is cash generated by the core business after working-capital movements, as presented in the operating section of the statement of cash flows under IAS 7 — before investing capex and financing.
IAS 7 splits cash into operating, investing and financing. Operating cash flow (OCF / CFO) is the first of those: collections from customers, payments to suppliers and employees, and operating taxes, with interest classified as operating or financing depending on policy.
The indirect method (the usual mid-market presentation) starts from profit and undoes accruals:
OCF = Profit ± non-cash items ± Δ working capital ± other operating adjustments
EBITDA is often a lazy proxy for the first two terms and a complete miss on the third.
Illustration only. Hypothetical wholesaler.
| Bridge | Amount |
|---|---|
| Operating profit | €4.0m |
| Depreciation | +€0.9m |
| EBITDA | €4.9m |
| Increase in receivables | −€1.4m |
| Increase in inventory | −€0.8m |
| Increase in payables | +€0.6m |
| Other (provisions, etc.) | −€0.1m |
| Operating cash flow | €3.2m |
| Maintenance CAPEX | −€0.7m |
| Approximate FCF to firm (simplified) | €2.5m |
The teaser EBITDA of €4.9m overstated cash generation by 35% in a year the company funded customer growth with working capital.
Persistent OCF below EBITDA is a growth story (investment in WC) or a quality story (collections, inventory). OCF above EBITDA can be a payables stretch — which reverses.
Interest paid inside operating cash flow makes cross-company comparison harder; always read the classification note.
Quality of earnings; debt capacity; whether a locked box date sits on a cash-rich or cash-poor season.
IAS 7 allows judgement on interest and dividends. Non-cash working-capital definitions in SPAs often do not match the cash-flow statement. OCF is before capex, so it is not free cash flow.
Dazur reconciles EBITDA to OCF to FCF as a single structured bridge. That is the difference between a multiple on earnings and a multiple on cash the company actually produced.