OCF Calculator

Operating cash flow is the cash generated from the normal operations of a business. Capital budgeting is really important when making important business decisions. It helps in planning an organization's long-term investments. It is useful for measuring the cash margin that is generated by the organization's operations. OCF Tax shield approach is a technique used in estimating the capital budgeting of a firm. Use this OCF calculator to determine operating cash flow ratio.

OCF Tax Shield Approach

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Operating cash flow is the cash generated from the normal operations of a business. Capital budgeting is really important when making important business decisions. It helps in planning an organization's long-term investments. It is useful for measuring the cash margin that is generated by the organization's operations. OCF Tax shield approach is a technique used in estimating the capital budgeting of a firm. Use this OCF calculator to determine operating cash flow ratio.

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Formula:

Operating Cash Flow = ( Sales - Costs) × ( 1 -Tax Rate/100 ) + ( Depreciation × Tax Rate/100)

Example:

Find the OCF ratio if the sales is $20000, cost is $250, tax rate is 15% and depreciation is $230.

Solution:

Operating Cash Flow = ( 20000 - 250 ) × ( 1 - 15/100) + ( 230 × 15 /100)
= $16822

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