What Is the Company’s “Operating Cash Flow”? Does It Grow at a Constant Rate?

Operating cash flow is the cash generated from the company’s operations. Cash flow numbers are calculated from net income, depreciation, and adjustments to net income, changes in accounts receivable, changes in liabilities, changes in inventories, and changes in other operating activities. Cash flow should be positive. But some companies report positive net income and negative cash flow. This means the companies are using aggressive accounting methods to show positive net income. Investors should try to avoid these kinds of companies.

Now we can calculate the cash flow numbers of Coca-Cola for the last 10 years.

2000: $2,950

2001: $4,782

2002: $4,782

2003: $5,197

2004: $5,740