Final answer:
OCF stands for Operating Cash Flow, which can be calculated using the top-down or bottom-up approach. The top-down approach adds depreciation to net income, while the bottom-up approach adds non-cash expenses to net income.
Step-by-step explanation:
The subject of this question is Business and the grade level is High School.
OCF stands for Operating Cash Flow and it is an important financial metric used to measure a company's cash-generating ability from its core operations. OCF can be calculated using two different approaches - the top-down approach and the bottom-up approach.
In the top-down approach, OCF is calculated as net income plus depreciation. This approach focuses on starting with the company's net income and adding back non-cash expenses, such as depreciation. By doing so, it provides a clear indication of the cash generated by the company's operations, excluding non-cash items.
In the bottom-up approach, OCF is calculated by adding non-cash expenses, such as depreciation, to net income. This approach starts with the company's net income and adjusts it for non-cash items to arrive at the cash generated by the company's operations.