OCFD is a system-calculated KPI in Weissr Capex Strategy, generated by the backend. You can calculate OCFD by simply addingSYS_OCFD as a formula in the model-building tool. OCFD is a core part of the CVA framework (Cash Value Added) and helps evaluate whether an investment is creating or destroying value over time.

Purpose of OCFD

OCFD represents the real cash-flow “rent” that an asset must generate annually to:

• Cover the cost of capital (i.e. deliver the required return to investors and lenders, based on WACC)

• Fully repay the original investment by the end of the asset’s useful life (like a repayment schedule, calculated as an annuity)

• Preserve purchasing power over time (if inflation is included in the calculation)

OCFD (Operating cash flow demand) answers the question: What is the required cash flow each year through the economic life to get the investment back (NPV = 0). The shorter the life, the higher the OCFD.

In theory, one can therefore compare actual operating cash flow to OCFD year by year and get a clear and consistent reference point, year by year.

OCFD in Weissr

You can see the OCFD (red reference curve) in by going to Capex Strategy → Assets → Organisational Nodes (such as Production Site) → Investment Map.

Calculation and Example

OCFD is calculated as a real-term annuity:

• It represents one constant real payment per year

• The present value (NPV) of these payments equals the original investment

• If inflation is enabled, the real annuity is indexed yearly

You calculate the annuity factor:

Where:

• r = WACC (real discount rate)

• π = inflation rate

• n = asset lifetime (in years)
  

Once you have the annuity factor, simply multiply it by the investment/capex:

OCFD per year for an investment = Investment * Annuity Factor

SIMPLE EXAMPLE in the table below where:

• r = 5%

• π = 0%

• n = 5%