What is the Operating Cash Flow Growth Rate?
The Operating Cash Flow Growth Rate (aka Cash Flow From Operations growth rate) is the long term rate of growth of operating cash, the money that is actually coming into the bank from business operations. This can be substantially different than EPS since it is real money (as opposed to earnings which can be somewhat theoretical). Knowing the growth rate helps you determine if the trend of 'operating cash' within a company is good enough to make the business 'wonderful' by Rule #1 standards.
When you begin calculating below, it's important that you are entering the OLDEST information you have, then the NEWEST, and then the number of years between them.
Operating Cash Flow Growth Rate:
Using the research tool of your choice, locate historical Cash Flow Statements going back 10 years (if possible). On MSN Money, Cash Flow Statements are located at Financial Results > Statements > Cash Flow.
For the "Cash from Operating Activities" value, use the appropriate number from the line "Cash from Operating Activities".
If these numbers are in line with Rule #1 requirements, move onto the ROIC to finish determining if this business is right for you.
This calculator determines ROIC; the most important number to tell you if a business is being run well.Calculate ROIC