How To Calculate Operating Cash Flow in Oracle EBS | Arithmix

Calculating operating cash flow is an essential task for any business owner or financial analyst. It helps you understand how much cash your business generates from its core operations, which is crucial for making informed decisions about investments, financing, and other financial activities. In this article, we will discuss what operating cash flow is, when it is valuable to calculate it, and how to calculate it in Oracle EBS.

What Is Operating Cash Flow?

Operating cash flow (OCF) is the cash generated or used by a company's core operations during a specific period. It is calculated by subtracting the company's operating expenses from its operating revenues. Operating revenues include all the cash inflows from the company's primary business activities, such as sales revenue, service revenue, and other income. Operating expenses include all the cash outflows related to the company's core operations, such as salaries, rent, utilities, and other expenses.

OCF is an essential metric for evaluating a company's financial health because it reflects the cash generated or used by its core operations, which are the primary drivers of its long-term success. A positive OCF indicates that a company is generating cash from its core operations, which can be used to fund growth, pay dividends, or repay debt. A negative OCF indicates that a company is using cash from its core operations, which may be a sign of financial distress.

When Is It Valuable To Calculate Operating Cash Flow?

Calculating OCF is valuable in several situations, such as:

• When evaluating a company's financial health
• When comparing the financial performance of different companies
• When assessing the impact of changes in a company's operations or financial structure
• When forecasting a company's future cash flows

By understanding a company's OCF, you can make informed decisions about its financial health and future prospects. For example, if a company has a positive OCF, it may be a good investment opportunity because it has the cash flow to fund growth and pay dividends. Conversely, if a company has a negative OCF, it may be a red flag that it is struggling to generate cash from its core operations.

How To Calculate Operating Cash Flow in Oracle EBS

Calculating OCF in Oracle EBS involves several steps:

1. Identify the operating revenues for the period
2. Identify the operating expenses for the period
3. Calculate the net cash flow from operating activities by subtracting the operating expenses from the operating revenues

Here's an example:

Let's say that your company had operating revenues of $100,000 and operating expenses of $80,000 for the period. To calculate the OCF, you would subtract the operating expenses from the operating revenues:

Net cash flow from operating activities = Operating revenues - Operating expenses

Net cash flow from operating activities = $100,000 - $80,000

Net cash flow from operating activities = $20,000

This means that your company generated $20,000 in cash from its core operations during the period.

Calculating OCF in Oracle EBS can be more complex if your company has multiple business units or operates in multiple currencies. In these cases, you may need to use more advanced accounting techniques to calculate the OCF accurately. However, the basic principles remain the same: identify the operating revenues and expenses for the period and subtract the expenses from the revenues to calculate the net cash flow from operating activities.

In conclusion, calculating operating cash flow is an essential task for any business owner or financial analyst. It helps you understand how much cash your business generates from its core operations, which is crucial for making informed decisions about investments, financing, and other financial activities. By following the steps outlined in this article, you can calculate OCF in Oracle EBS and use this metric to evaluate your company's financial health and future prospects.

How Do You Calculate Operating Cash Flow in Oracle EBS

Oracle EBS itself isn’t naturally geared towards letting you calculate complex metrics like Operating Cash Flow. As an alternative, teams typically use products like Arithmix to import data from Oracle EBS and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Oracle EBS, combine it with data from other systems, and create calculations like Operating Cash Flow.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Operating Cash Flow in Arithmix

Calculating metrics like Operating Cash Flow is simple in Arithmix. Once you've created your free account, you’ll be able to import your Oracle EBS data, and use it to create natural language formulas for metrics like Operating Cash Flow.

Arithmix is designed to give you the power to build any calculations you want on top of your Oracle EBS data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.