Cash Flow Quality Analysis: 3-Metric Framework for NVDA, AMD, INTC, AVGO
Master the 3-metric cash flow quality framework used by institutional investors. Analyze OCF/NI Ratio, FCF Consistency, and Cash Conversion Cycle with validated 2025 data for NVIDIA, AMD, Intel, and Broadcom. Includes specific thresholds and step-by-step methodology.
Last Updated: November 23, 2025 (Q3 2025 TTM data) • Next Update: February 2026 (after Q4 2025 earnings)
TL;DR: Is NVIDIA's Cash Flow Sustainable?
NVIDIA generates $77.3B in annual free cash flow with perfect 8/8 quarter consistency - but its OCF/NI ratio of 0.84x signals working capital is consuming cash. This 3-metric framework shows how to evaluate any company's cash flow quality. Applied to 4 semiconductors, NVIDIA scores "strong with caveats" while Intel shows "cash flow distress" (1/8 FCF, -$10.9B burning).
Why Cash Flow Quality Matters More Than Earnings
NVIDIA reported a 53% net margin in 2025. Bulls celebrate. Bears call it a bubble. But both sides are asking the wrong question.
The real question isn't "How profitable is NVIDIA?" - it's "Is that profit backed by cash?"
Earnings can be manipulated through accounting choices. Cash flow cannot. A company can report record profits while burning cash. It can show declining earnings while generating more cash than ever.
This guide teaches a 3-metric framework to evaluate cash flow quality for any company, then applies it to NVIDIA, AMD, Intel, and Broadcom using validated 2025 data.
What is OCF/NI Ratio and What's a Good Value?
Operating Cash Flow to Net Income (OCF/NI) ratio measures how much of a company's reported profit is backed by actual cash.
Formula:
OCF/NI Ratio = Operating Cash Flow (TTM) ÷ Net Income (TTM)
OCF/NI Ratio Interpretation Thresholds
| Rating | OCF/NI Range | Interpretation |
|---|---|---|
| Excellent | >1.2x | Cash exceeds reported profit - high quality |
| Good | 1.0-1.2x | Profit solidly backed by cash |
| Warning | 0.8-1.0x | Working capital consuming some cash |
| Red Flag | <0.5x | Potential earnings manipulation or distress |
Why OCF/NI Ratio Matters
A ratio above 1.0 means the company generates more cash than it reports in earnings. This typically happens when:
- Depreciation adds back prior investments now generating returns
- Working capital is being managed efficiently
- Revenue recognition is conservative
A ratio below 1.0 means cash lags reported profit. Common causes:
- Accounts receivable growing faster than revenue (customers paying slower)
- Inventory buildup (intentional for launches or concerning if demand softens)
- Aggressive revenue recognition (booking sales before cash collection)
NVIDIA's OCF/NI ratio is 0.84x - in the "warning" zone. For every $1 of reported profit, NVIDIA generates only $0.84 in cash. This isn't cause for panic, but it warrants monitoring.
What is FCF Consistency and Why Does It Matter?
FCF Consistency measures how reliably a company generates positive free cash flow across business cycles.
Metric: Count of positive FCF quarters out of the last 8 quarters.
FCF Consistency Interpretation Thresholds
| Rating | Quarters Positive | Interpretation |
|---|---|---|
| Excellent | 8/8 (100%) | Reliable cash generator through cycles |
| Good | 7/8 (87.5%) | Minor cyclicality, generally reliable |
| Warning | 5-6/8 (62-75%) | Inconsistent business model |
| Red Flag | <5/8 (<62.5%) | Cash flow distress or highly cyclical |
Why Consistency Beats Magnitude
One exceptional quarter doesn't prove a business model. Eight consecutive positive quarters does.
NVIDIA's 8/8 FCF consistency through the 2022 crypto crash, 2023 AI boom, and 2024-2025 growth phase demonstrates a genuinely cash-generative business - not a one-time windfall.
Contrast with Intel: 1/8 positive quarters (12.5% consistency). This isn't cyclicality - it's cash flow distress.
What is Cash Conversion Cycle (CCC)?
Cash Conversion Cycle measures how many days it takes a company to convert inventory and other resource inputs into cash flows from sales.
Formula:
CCC = DSO + DIO - DPO
Where:
- DSO (Days Sales Outstanding) = (Accounts Receivable ÷ Revenue) × 365
- DIO (Days Inventory Outstanding) = (Inventory ÷ COGS) × 365
- DPO (Days Payables Outstanding) = (Accounts Payable ÷ COGS) × 365
CCC Component Breakdown
| Component | What It Measures | Lower is Better? |
|---|---|---|
| DSO | Days to collect from customers | Yes - faster collection |
| DIO | Days inventory sits before sale | Usually - but launches may spike |
| DPO | Days to pay suppliers | No - longer is better (leverage) |
| CCC | Net working capital cycle | Yes - shorter = more efficient |
Semiconductor CCC Benchmarks
| CCC Range | Assessment |
|---|---|
| <50 days | Excellent - lean operations |
| 50-100 days | Acceptable for semiconductors |
| 100-150 days | High - capital-intensive |
| >150 days | Concerning - working capital drag |
NVIDIA's CCC is 81 days - acceptable for a semiconductor company, but not best-in-class.
Semiconductor Cash Flow Comparison: NVDA vs AMD vs INTC vs AVGO
This table compares cash flow quality metrics across four major semiconductor companies using Q3 2025 TTM data.
Full Cash Flow Comparison (2025 Data)
| Metric | NVDA | AMD | INTC | AVGO |
|---|---|---|---|---|
| FCF TTM | $77.3B | $4.0B | -$10.9B | $24.9B |
| FCF Margin | 41.3% | 13.7% | -20.6% | 41.6% |
| OCF/NI Ratio | 0.84x | 1.72x | -0.49x | 1.34x |
| FCF Consistency | 8/8 | 8/8 | 1/8 | 8/8 |
| CapEx Coverage | 14.25x | 5.85x | 0.48x | 50.07x |
| Net Cash | +$52B | +$2.7B | -$29.6B | -$53.5B |
Cash Conversion Cycle Comparison
| Company | CCC | DSO | DIO | DPO | Assessment |
|---|---|---|---|---|---|
| NVDA | 81 days | 48 | 82 | 48 | Acceptable - DIO elevated for Blackwell |
| AMD | 159 days | 75 | 137 | 54 | High - capital-intensive model |
| INTC | 29 days | 21 | 117 | 109 | Low CCC but leveraging suppliers |
| AVGO | 37 days | 31 | 35 | 30 | Excellent - lean operations |
Key Findings by Company
NVIDIA (NVDA): Strong with caveats
- Excellent: $77.3B FCF, 41.3% margin, 8/8 consistency, +$52B net cash
- Warning: 0.84x OCF/NI ratio (working capital consuming cash)
- Context: 82-day DIO reflects intentional Blackwell inventory buildup
AMD: Improving but capital-intensive
- Excellent: 1.72x OCF/NI ratio (best in group), 8/8 consistency
- Warning: 159-day CCC (worst in group), only 13.7% FCF margin
- Context: High inventory cycle reflects fabless model complexity
Intel (INTC): Cash flow distress
- Red flag: -$10.9B FCF (burning cash)
- Red flag: 1/8 FCF consistency (87.5% failure rate)
- Red flag: 0.48x CapEx coverage (cannot fund capex from operations)
- Red flag: $29.6B net debt
Broadcom (AVGO): Quality benchmark
- Excellent: 1.34x OCF/NI ratio, 8/8 consistency, 41.6% FCF margin
- Excellent: 50x CapEx coverage, 37-day CCC
- Caveat: $53.5B net debt (acquisition-driven leverage)
How to Analyze Any Company's Cash Flow Quality
Follow this 3-step framework to evaluate cash flow quality for any company.
Step 1: Calculate OCF/NI Ratio
Formula:
OCF/NI Ratio = Operating Cash Flow (TTM) ÷ Net Income (TTM)
NVIDIA Example:
Operating Cash Flow TTM: $65.7B
Net Income TTM: $78.1B
OCF/NI Ratio: $65.7B ÷ $78.1B = 0.84x
Interpretation: Below 1.0 indicates working capital is consuming cash.
Step 2: Count FCF Positive Quarters
Process:
- Pull Free Cash Flow for last 8 quarters
- Count how many are positive
- Calculate percentage
NVIDIA Example:
Q4 2023: +$11.2B ✓ Q1 2024: +$14.9B ✓
Q2 2024: +$13.5B ✓ Q3 2024: +$16.8B ✓
Q4 2024: +$15.3B ✓ Q1 2025: +$18.2B ✓
Q2 2025: +$17.4B ✓ Q3 2025: +$19.1B ✓
Result: 8/8 positive (100% consistency)
Step 3: Calculate Cash Conversion Cycle
Formula:
CCC = DSO + DIO - DPO
NVIDIA Example:
DSO: 48 days DIO: 82 days DPO: 48 days
CCC = 48 + 82 - 48 = 81 days
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Is NVIDIA's Cash Flow Sustainable?
Based on the 3-metric framework, NVIDIA's cash flow is sustainable with one area to monitor.
What's Strong
| Metric | NVIDIA Value | Assessment |
|---|---|---|
| FCF TTM | $77.3B | Exceptional scale |
| FCF Margin | 41.3% | Software-like margin |
| FCF Consistency | 8/8 | Perfect through cycles |
| CapEx Coverage | 14.25x | OCF covers capex 14x |
| Net Cash | +$52B | No debt concerns |
What to Monitor
| Metric | Current Value | Threshold for Concern |
|---|---|---|
| OCF/NI Ratio | 0.84x (Warning) | Drop below 0.7x |
| CCC | 81 days | Rise above 100 days |
| DIO | 82 days | Rise above 100 days |
Verdict
NVIDIA's cash flow quality is strong but not perfect. The 0.84x OCF/NI ratio confirms working capital concerns - but 8/8 FCF consistency and 41% margin prove the underlying business is genuinely cash-generative.
Watch Q4 2025 and Q1 2026: If OCF/NI improves above 1.0x as Blackwell inventory converts to sales, the working capital concern resolves. If it stays below 0.8x, that's a more persistent issue.
What Do Bears Get Wrong About NVIDIA's Cash Flow?
| Bear Concern | Cash Flow Reality |
|---|---|
| "Margins are compressing" | FCF Margin 41.3% is exceptional (2x AMD) |
| "AI bubble will pop" | 8/8 positive quarters through cycles = resilient |
| "Growth is slowing" | $77B FCF > most companies' revenue |
Bears are right about working capital (0.84x OCF/NI confirms it). But they're wrong about the overall business quality.
What Should Bulls Watch?
| Warning Sign | Current Value | Concern Threshold |
|---|---|---|
| OCF/NI Ratio | 0.84x | Drop below 0.7x |
| FCF Consistency | 8/8 | First drop to 7/8 |
| FCF Margin | 41.3% | Below 35% for 2+ Qs |
| CCC | 81 days | Rise above 100 days |
Apply This Framework to Any Stock
The 3-metric cash flow quality framework works for any company:
- OCF/NI Ratio - Is profit backed by cash?
- FCF Consistency - Is cash generation reliable?
- Cash Conversion Cycle - Is working capital efficient?
These calculations take 30+ minutes manually per company. MetricDuck pre-computes them for 900+ companies with 8-quarter trends.
Analyze any company's cash flow quality at metricduck.com/company/TICKER
Methodology
Data Sources
All financial data is sourced from SEC 10-Q and 10-K filings via the EDGAR database. TTM (Trailing Twelve Months) metrics aggregate the most recent four quarters of data.
| Company | Latest Filing | Data As Of | Filing Type |
|---|---|---|---|
| NVIDIA | October 2025 | Q3 FY2026 | 10-Q |
| AMD | June 2025 | Q2 FY2025 | 10-Q |
| Intel | June 2025 | Q2 FY2025 | 10-Q |
| Broadcom | August 2025 | Q3 FY2025 | 10-Q |
Calculation Methodology
- OCF/NI Ratio: Operating Cash Flow (TTM) ÷ Net Income (TTM)
- FCF: Operating Cash Flow - Capital Expenditures
- FCF Margin: Free Cash Flow ÷ Revenue
- CCC: Days Sales Outstanding + Days Inventory Outstanding - Days Payables Outstanding
Update Frequency
This analysis is updated quarterly following each company's 10-Q filing. Next update: February 2026 (Q4 2025 data).
Disclaimer
This analysis is for educational purposes only and does not constitute investment advice. The information is based on publicly available SEC filings and may contain errors or omissions. Past performance does not guarantee future results. Investors should conduct their own due diligence and consult qualified financial advisors before making investment decisions.
MetricDuck provides financial data and analysis tools. We have no position in the securities discussed and receive no compensation from the companies mentioned.
Data validated: November 23, 2025 | Source: MetricDuck analysis of SEC filings
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