Cash Flow From Operations

What is Cash Flow From Operations?

Cash flow usually implies the financial health of a company’s business. The cash flow statement is separated into three sections: cash flow from operations, cash flow from investing, and cash flow from financing.

The operating cash flow implies the money the company brings in through regular business operations, such as selling goods or providing services to customers. It is often the first section under the cash flow statement.

Cash Flow from Operations = Net Income + Non-Cash Items + Changes in Working Capital

As the formula above shows, cash flow reflects the direct results of the company’s operations, adjusted for any non-cash activities, such as stock-based compensation and deferred taxes. The cash flow from operations captures the liquidity related to a company’s core business operations.

The picture below shows the cash flow from the operating activities of Nvidia. The spreadsheet includes data from the fiscal year 2019 to 2021.