Operating Cash Flow

Operating cash flow is the cash a business generates from its normal operations over a period. For a rental property, the closest match is NOI measured on a cash basis. Both count collected rent less the cash spent running the building, before any loan payment or capital project.

The two can differ in a given year. NOI includes a reserve for replacements, $2,280 a year on the default house, even when no roof or furnace was bought. Cash flow from operations only counts money that actually left the account.

Corporate cash flow statements also move interest into or out of operating cash flow depending on the accounting standard. Real estate NOI keeps interest out entirely. When comparing a property's NOI to a company's operating cash flow, check which items each one includes.