Operating cash flow and net income are two metrics used to measure a company’s financial performance. Operating cash flow is the cash flow generated from the company’s operations during a certain period of time, while net income is the amount of money a company earns after all expenses are deducted from revenue.
While operating cash flow and net income provide an indication of a company’s financial performance, there are several differences between the two. Operating cash flow does not factor in one-time or non-operating expenses, such as taxes, dividends and debts, while net income does. Additionally, while net income reflects the net profit of a business, operating cash flow indicates the amount of cash a company has available to cover its operating expenses and can be volatile due to changes in a company’s inventory and accounts receivable.
Ultimately, operating cash flow serves as a more comprehensive measure of a company’s financial performance and can be used to assess a company’s future liquidity, while net income can be used as a reference to assess a company’s historical financial performance.