Standard & Poor's refers to the measure as free operating cash flow and equates it to cash flow from operations minus capital expenditures (Standard and Poor's Encyclopedia of Analytical Adjustments for Corporate Entities, Jul.
Cash flow from customers equals revenues minus the change in accounts receivable.
Cash flow from operating activities omits depreciation and similar charges because they designate cost allocations that take the cost of the asset and spread it over the asset's life in a rational and systematic order.
When users compute free cash flow, they generally subtract the cash flow for purchases of property, plant, and equipment--a line often found in the investing activities section of the cash flow statement--from the cash flow from operating activities.
Free cash flow and business combinations
These sufficiency and efficiency ratios provide additional information (over traditional financial ratios) about the relationship between cash
flow from operations and other important operating variables.
Cash flows: another approach to ratio analysis
The important point is that cash flow from operations, just like income from operations, can include a diverse mix of transactions representing a variety of unusual events.
It normally is defined as cash flow from operations less all dividend payments.
The ability of the company to pay all dividends is reflected by cash flow from operations divided by total dividend payments.
A suggested alternative measure of the quality of income ratio is cash flow from operations before interest and taxes divided by income before interest, taxes and depreciation.
Developing ratios for effective cash flow statement analysis
The indirect method starts with net income and adjusts it for revenue and expense items that were not the result of operating cash transactions in the current period, to reconcile it to net cash
flow from operating activities.
Preparing and presenting statements of cash flows
The SEC observer expressed concern this consensus might be analogized to similar investments in collateralized borrowing structures when (1) the underlying collateral is of a lesser credit quality than that defined in this consensus or (2) the cash
flow from the underlying collateral cannot reasonably be estimated.
Collateralized mortgage obligations (CMOs)