Cash From Operations

Fundamental Library

Accumulated Depreciation
Adjustments (Cash Flow from Operating Activities)
Advance from Customers
Asset Turnover
Bonus Issue
Book Value / Equity Capital
CAGR (Compound Annual Growth Rate)
Capital Work in Progress (CWIP)
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Cash From Financing
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Cash From Operations
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Cash From Operations

Explanation: Cash From Operations (CFO) represents the cash generated or used by a company’s core business operations, excluding financing and investing activities. It reflects the cash flow generated from selling goods or services, collecting payments from customers, and paying suppliers and employees.

Example: In FY23, TCS had CFO of 41,965 crore. This means that TCS generated 41,965 crore in cash from its core business operations during the fiscal year. This cash flow is derived from revenues earned from providing IT services, collecting payments from clients, and managing operational expenses.

If a company receives payments from clients for completed projects, collects accounts receivable, and effectively manages its working capital, it will contribute to a positive cash flow from operations. Cash From Operations is a critical measure of a company’s financial health as it indicates its ability to generate cash internally to fund its operations, investments, and debt obligations.

Cash From Operations (CFO) differs from Net Profit in that CFO focuses solely on the cash generated or used by a company’s core business operations, while Net Profit represents the accounting measure of a company’s profitability after deducting all expenses, including non-cash items like depreciation and amortization. While Net Profit is based on accrual accounting principles and includes non-cash transactions, CFO provides a more accurate picture of a company’s liquidity and cash flow position, as it reflects the actual cash inflows and outflows from operating activities.

You can view the Cash from Operations for any company on Radar in the Cash Flow section.

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