Operating cash flow is how much cash the business produced from its ordinary activity. Free cash flow is what's left after the necessary investment in property, equipment and infrastructure — the money that genuinely remains for owners, to pay a dividend, buy back stock or repay debt.

The key cross-check is cash conversion: free cash flow divided by net income. Around 1 or better over several years means the profit is real and actually arrives. Consistently low means the profit exists on paper, and where it went deserves an answer.

The most common answer is working capital: the company sold, booked revenue, but the customer hasn't paid — the line that grew is receivables. Or it produced goods that haven't sold, and inventory swelled. Both grow naturally as a business grows; the problem starts when they grow faster than revenue.

This is one of the best early warnings that exists. Revenue up 15% while receivables are up 40% says the sale was made on unusually generous credit terms — meaning demand is weaker than the top line suggests.

Negative free cash flow is not automatically bad. A company building a plant or infrastructure burns cash today to produce more tomorrow, and that's a legitimate business decision. A company burning cash merely to fund ordinary operations is an entirely different story. The difference is visible in the statement: is the burn going into property and equipment, or into covering day-to-day activity?

The companion question: how long the cash lasts at the current burn rate. A company burning cash with two years of runway is in a completely different place from one with two quarters left — the second has a capital raise coming, and a raise dilutes you.