The finance definition of operating cash flow excludes interest as an operating flow, whereas the accounting definition includes it as an operating flow.

Question

Quizplus · Accepted Answer

The finance definition of operating cash flow only includes cash flows directly related to operations, such as revenue and expenses, while excluding financing and investing activities. Interest expense is considered a financing activity and therefore excluded from the finance definition of operating cash flow. However, in accounting, interest expense is included as part of operating expenses and is thus included in the operating cash flow calculation.

The Finance Definition of Operating Cash Flow Excludes Interest as an Operating