Bill Hanna, CPAAccounting Leader Driving Financial Excellence

EBITDA vs. OCF (Operating Cash Flow)

19 Jan 2026 · 1 min

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In this concise finance explainer, CPA Bill Hanna differentiates EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) from Operating Cash Flow (OCF). He defines EBITDA as a measure of a business’s core profitability, providing its formula: net income plus interest, taxes, depreciation, and amortization. He then defines OCF as a gauge of liquidity—how much cash the business generates—detailing its formula: net income plus non‑cash expenses (depreciation, amortization, stock‑based compensation) plus or minus changes in working capital (accounts payable, receivable, inventory). Hanna emphasizes that EBITDA reflects profitability while OCF reflects cash‑generating ability, and invites viewers to follow his channel for more finance insights.

Chapters

EBITDA versus operating cash flow. What is the difference? EBITDA is earnings before interest, tax, depreciation, and amortization, and it tells us about the profitability of the business. Operating cash flow, that tells us about the liquidity of the business or its ability to generate cash. What is the formula for both of them? For EBITDA, the formula goes net income plus interest, taxes, depreciation, amortization. We get to EBITDA. The formula for operating cash flow begins with net income, adds non-cash expenses like depreciation, amortization, non-cash stock-based comp expenses, and then it adds or subtracts the working capital changes, changes in accounts payable, receivable, and inventory, and it arrives at operating cash flow. So EBITDA tells us whether the core operation of the business is profitable, while OCF tells us whether the business is able to generate the cash. If you want to learn more Finance Bytes from me, follow the channel.