Final answer:
Operating cash flow in accounting is calculated as the sum of net income and depreciation/amortization. This measure reflects the cash generated by a company's regular business operations, separate from its accounting or economic profit calculations.
Step-by-step explanation:
In accounting, operating cash flow is often calculated as the sum of net income and depreciation/amortization. These components are critical as net income reflects the profitability of the company after all expenses and revenues have been accounted for, while depreciation and amortization are non-cash expenses that reduce the net income but do not impact cash flow. Operating cash flow provides a measure of the amount of cash generated by a company's normal business operations.
It's important to distinguish between accounting profit and economic profit. Accounting profit is total revenue minus explicit costs, which are both cash concepts representing the difference between dollars brought in and dollars paid out. Economic profit, on the other hand, is total revenue minus total cost, encompassing both explicit and implicit costs.