Net income vs. operating cash flow

Net income vs. operating cash flow

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Net income vs. operating cash flow
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Net income and operating cash flow are not the same and can be very different.

A company may report a net profit but negative operating cash flow, or conversely, report a net loss but positive operating cash flow.

That's because net income is a company's profit calculated on an accrual basis rather than an income statement. This means that net income increases due to credit sales that haven't yet received cash and decreases due to non-cash expenses such as depreciation and amortization.

Operating cash flow, on the other hand, is the actual cash flow a company generates from its core business. It increases when cash is collected from customers and decreases when expenses are paid, and is not affected by non-cash costs.

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