Operating Cash Flow

Operating Cash Flow (OCF) and Net Income are both essential financial metrics, but they serve fundamentally different purposes, with OCF often providing a more accurate picture of a fintech company's true financial health. Net Income, found on the income statement, is an accounting measure that includes non-cash items like depreciation, amortization, and stock-based compensation, and is heavily influenced by accrual accounting principles. For instance, a large software-as-a-service (SaaS) fintech platform might report high Net Income due to recognizing revenue from a multi-year contract upfront (accrual), even if the cash payments are staggered over the contract's life. Conversely, Operating Cash Flow, derived from the cash flow statement, measures the actual cash inflows and outflows from core business operations. It starts with Net Income and adjusts for all non-cash items and changes in working capital (e.g., accounts receivable, accounts payable).