Operating cash flow against net income
What it measures¶
Operating cash flow is the cash that came in from running the business over the year; net income is the profit the income statement reports. This row of the earnings-quality panel counts the fiscal years in which operating cash flow was below net income — years in which part of the reported profit did not arrive as cash.
Why it is on the page¶
A single year of cash below profit is common: a growing company ties up cash in stock and in money customers owe it. Several such years in a row are a pattern worth a look, because over time a healthy business turns its profit into at least as much cash. The row sits beside the Sloan accruals ratio, which measures the same gap as a share of assets.
Thresholds, their source and the population they were fitted on¶
The row draws no bar; it states the count. Elsewhere in the product the same comparison carries fixed lines:
| Where | Line | Source |
|---|---|---|
| Why paragraph, Earnings quality panel | operating cash flow below 0.8 times net income in two consecutive years is flagged | a design choice of the summary |
| condition summary, Cash conversion check | three-year operating cash flow at least equal to three-year net income | Piotroski (2000); Montier (2008) |
- Evidence grade: design choice (the 0.8 flag); peer-reviewed and replicated (the three-year comparison).
A worked example¶
Celestica, as the Fundamentals page showed it on 9 August 2026: operating cash flow was below net income in 1 of 4 fiscal years — fiscal 2025, the year of fastest growth. Worth a glance at working capital, not an alarm.
Honeywell International, as the condition summary described fiscal 2025 on 25 October 2026: Operating cash flow (6.4 billion) was 1.36x net income (4.7 billion) in FY2025.
What “No verdict” means here¶
The row carries no verdict of its own. A year missing either figure is not counted either way, and the row says how many years could be compared.
What the verdict is and is not¶
The count describes how often profit ran ahead of cash in the stored years. It is not a finding of anything improper, not a forecast, and not an instruction to trade the shares.