How To Calculate Operating Cash Flow Margin in Quickbooks Online | Arithmix

Calculating operating cash flow margin is an important financial analysis tool that helps businesses understand their cash flow situation. It is a measure of how much cash a company generates from its operations, relative to its revenue. In this article, we will discuss what operating cash flow margin is, when it is valuable to calculate it, and how to calculate it.

What Is Operating Cash Flow Margin?

Operating cash flow margin is a financial metric that shows the percentage of a company's revenue that is generated from its operations. It is calculated by dividing operating cash flow by revenue. Operating cash flow is the cash that a company generates from its operations, such as sales, minus the cash that it spends on operating expenses, such as salaries, rent, and utilities. Revenue is the total amount of money that a company earns from its sales.

Operating cash flow margin is a useful tool for businesses to understand their cash flow situation. It shows how much cash a company is generating from its operations, which is important for paying bills, investing in new projects, and paying dividends to shareholders. A high operating cash flow margin indicates that a company is generating a lot of cash from its operations, which is a good sign for investors and lenders.

When Is It Valuable To Calculate Operating Cash Flow Margin?

Calculating operating cash flow margin is valuable for businesses in several situations. For example, it can help businesses understand their cash flow situation when they are considering taking on new projects or investments. It can also help businesses identify areas where they can improve their cash flow, such as by reducing operating expenses or increasing sales.

Operating cash flow margin is also valuable for investors and lenders who are evaluating a company's financial health. A high operating cash flow margin indicates that a company is generating a lot of cash from its operations, which is a good sign for investors and lenders. It shows that a company has the ability to pay its bills, invest in new projects, and pay dividends to shareholders.

How To Calculate Operating Cash Flow Margin

To calculate operating cash flow margin, you will need to know your company's operating cash flow and revenue. Operating cash flow can be found on the cash flow statement, which is a financial statement that shows the cash inflows and outflows of a company. Revenue can be found on the income statement, which is a financial statement that shows the revenue and expenses of a company.

Once you have these numbers, you can calculate operating cash flow margin by dividing operating cash flow by revenue. For example, if your company's operating cash flow is $100,000 and its revenue is $500,000, your operating cash flow margin would be 20% ($100,000 / $500,000).

It is important to note that operating cash flow margin should be compared to other companies in the same industry to get a better understanding of how your company is performing. Different industries have different operating cash flow margins, so it is important to compare your company to others in the same industry to get an accurate picture of your financial health.

In conclusion, calculating operating cash flow margin is an important financial analysis tool that helps businesses understand their cash flow situation. It is a measure of how much cash a company generates from its operations, relative to its revenue. It is valuable for businesses in several situations, such as when they are considering taking on new projects or investments, and for investors and lenders who are evaluating a company's financial health. To calculate operating cash flow margin, you will need to know your company's operating cash flow and revenue, and divide operating cash flow by revenue.

How Do You Calculate Operating Cash Flow Margin in Quickbooks Online

Quickbooks Online itself isn’t naturally geared towards letting you calculate complex metrics like Operating Cash Flow Margin. As an alternative, teams typically use products like Arithmix to import data from Quickbooks Online 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 Quickbooks Online, combine it with data from other systems, and create calculations like Operating Cash Flow Margin.

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 Margin in Arithmix

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

Arithmix is designed to give you the power to build any calculations you want on top of your Quickbooks Online 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.