Knowing how to pick out small bits of important information, combine them with other small bits of information and interpret the resulting number is more of an art than a science. But it’s undoubtedly one of the most important arts that an investor should practice.Cash flows from operating activities include transactions from the operations of the business. In other words, the operating section represent the cash collected from the primary revenue generating activities of the business like sales and service income. Operating activities are short-term and only affect the current period. For example, payment of supplies is an operating activity because it relates to the company operations and is expected to be used in the current period.
Operating cash flows are calculated by adjusting net income by the changes in current asset and liability accounts.