Final answer:
Positive operating cash flow is crucial for efficient working capital management, increased profitability, and making improved long-term investments. It is a vital sign of a company's financial health, enabling it to reinvest in growth without relying solely on debt.
Step-by-step explanation:
Operating cash flow should be positive to ensure efficient working capital management. A positive cash flow indicates that a company's liquid assets are increasing, allowing it to settle debts, reinvest in its business, return money to shareholders and have a buffer against future financial challenges. Positive cash flow contributes to increased profitability by providing the resources for companies to reinvest in equipment, structures, and research and development, which can lead to business growth. While higher debt levels may also be sustained with healthy cash flow, they are not directly indicative of the benefits of positive operating cash flow. Instead, companies can use their profits for improved long-term investments, without necessarily increasing debt levels.