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Glossary

FCF vs operating cash flow

By Oliver Wakefield-Smith, Founder, Digital Signet. Verified against primary filings; see /sources.

The wedge

OCF - CapEx = Standard FCF. ASC 230[ASC 230] and IAS 7[IAS 7] both put OCF at the top of the statement and CapEx in investing.

When to cite OCF (not FCF)

US GAAP vs. IFRS

US GAAP (ASC 230) requires the indirect-method reconciliation. IFRS (IAS 7) allows both direct and indirect; in practice indirect dominates. IFRS also gives more flexibility on classifying interest paid and received (operating or financing); GAAP forces interest paid into operating.

Most common analyst mistake

Saying "cash flow" without specifying which one. In sell-side notes "cash flow" sometimes means OCF, sometimes Standard FCF, sometimes FCFE. Always specify.

See also