Operating cash flow ratio
One measure the whole enterprise can read
The OCFR tells top management and operations, as production happens, whether the business is generating what it needs. It is read for direction and band, like a barometer.
What it is
A barometer, not a balance sheet
The operating cash flow ratio compares the cash that operations generate with the obligations falling due over the same period. In the Single Management System® it is read monthly, and it is built up run by run as production happens.
A reading above 1.0 means operations are covering what falls due. It is a measure of cash coverage, not profit. A reading below 1.0 is reported at management review whatever the band, as information for top management.
The OCFR does not need to be accurate to the dollar. Like a barometer, its value is in showing direction and whether the process is in its band, early enough to act.
Why this measure
Why the OCFR, and not profit
It is generated by operations
"Operating" is the point. The ratio moves with what happens on the floor, so operations can see their effect on the business.
It is available as you go
Profit is known after the period closes. The OCFR is built from each production run, so it is a leading reading rather than a lagging one.
It is the language of top management
Top management already thinks in cash. Using that measure brings them into the management system without asking them to learn a new one.
Three values
Setpoint, planned and measured
- The SMS setpointThe ideal that sets strategic direction. Companies see their position and direction against it (closer, unchanged or further), not its value.
- The planned OCFRWhat the business can achieve. Top management plans it for the period, and contract review sets it for each order using the Strategic Alignment Configurator.
- The measured OCFRWhat operations actually achieve, run by run. Across the period the runs form a distribution read against the plan.
Finding the shortfall
From the reading to the cause
When the measured OCFR falls short, causes are grouped under five categories (man and management, machine, material, method and measurement) and ranked by what each costs the OCFR, not by how often it occurs. The most expensive cause is worked first.
The planning tool
Strategic Alignment Configurator
The Strategic Alignment Configurator is where operations plan each order's OCFR before it runs and where management review compares planned and measured results. Data can be entered by hand or imported from your ERP or accounting system.
It is included with the ISO 9001:2026 course and is part of Gemba Symmetry.