If these are positive, then it indicates to the owner that the business is self - sufficient in funding its
daily operational cash flows internally.
When a company uses these funds to make capital improvements, acquire equipment or purchase supplies, it does not
use operational cash flow.
A recent report by the World Bank suggests that in Korea, Malaysia and Thailand, at least one - quarter of firms listed on the stock exchange were not able to meet their interest payments from
operational cash flows in 1999; this proportion was close to two - thirds in Indonesia.
Michael Smith, president of the SCRAMP Board of Governors, adds, «SCRAMP has a comprehensive plan in place for capital repairs, improvements and replacements that is fully funded by
positive operational cash flow.
While Chevron may be able to increase their dividend through the issuance of debt, we greatly prefer to invest in companies that are growing their dividends
through operational cash flow not through increased balance sheet leverage.
The increase in investment spending has hit free cash flow growth but growth in
operational cash flow is a better measure of overall growth.