diff --git a/.gitignore b/.gitignore
index 83694b8..ce7e455 100644
--- a/.gitignore
+++ b/.gitignore
@@ -57,6 +57,9 @@ coverage.xml
 .hypothesis/
 .pytest_cache/
 
+# Test artefacts
+*.csv
+
 # Translations
 *.mo
 *.pot
diff --git a/README.md b/README.md
index 71abf32..9336351 100644
--- a/README.md
+++ b/README.md
@@ -12,7 +12,7 @@ Built with the [Meltano SDK](https://sdk.meltano.com) for Singer Taps and Target
 
 | Setting                  | Required | Default | Description |
 |:-------------------------|:--------:|:-------:|:------------|
-| output_path              | False    | None    | Filesystem path where to store output files. By default, the current working directory will be used. |
+| output_path              | False    | None    | Filesystem path where to store output files. By default, the current working directory will be used. When specified, the output directory will be created automatically. |
 | file_naming_scheme       | False    | {stream_name}.csv    | The scheme with which output files will be named. Naming scheme may leverage any of the following substitutions:<BR/>- `{stream_name}`<BR/>- `{datestamp}`<BR/>- `{timestamp}` |
 | datestamp_format         | False    | %Y-%m-%d | A python format string to use when outputting the `{datestamp}` string. For reference, see: https://docs.python.org/3/library/datetime.html#strftime-and-strptime-format-codes |
 | timestamp_format         | False    | %Y-%m-%d.T%H%M%S | A python format string to use when outputting the `{timestamp}` string. For reference, see: https://docs.python.org/3/library/datetime.html#strftime-and-strptime-format-codes |
diff --git a/tests/test_sink.py b/tests/test_sink.py
new file mode 100644
index 0000000..f087f4b
--- /dev/null
+++ b/tests/test_sink.py
@@ -0,0 +1,49 @@
+from pathlib import Path
+
+import pytest
+
+from target_csv.sinks import CSVSink
+from target_csv.target import TargetCSV
+
+
+def test_sink_output_file_cwd():
+    """Verify `output_file` property without defining an output path."""
+    target = TargetCSV()
+    sink = CSVSink(
+        target=target, stream_name="foo", schema={"properties": {}}, key_properties=[]
+    )
+    assert sink.output_file == Path("foo.csv")
+
+
+@pytest.mark.parametrize(
+    "property_name", ["output_path", "destination_path", "output_path_prefix"]
+)
+def test_sink_output_file_with_path(tmp_path, property_name):
+    """Verify `output_file` property when defining an output path.
+
+    The test is parameterized to iterate and verify all the possible properties
+    which define an output path.
+    """
+    folder_path = tmp_path / "to/folder"
+    output_file = tmp_path / "to/folder/foo.csv"
+    target = TargetCSV(config={property_name: str(folder_path)})
+    sink = CSVSink(
+        target=target, stream_name="foo", schema={"properties": {}}, key_properties=[]
+    )
+    assert sink.output_file == output_file
+
+
+def test_sink_output_file_with_path_deprecated(tmp_path):
+    """Verify `output_file` property with deprecated `output_path_prefix` property."""
+    folder_path = tmp_path / "to/folder"
+    output_file = tmp_path / "to/folder/foo.csv"
+    target = TargetCSV(config={"output_path_prefix": str(folder_path)})
+    sink = CSVSink(
+        target=target, stream_name="foo", schema={"properties": {}}, key_properties=[]
+    )
+    with pytest.warns(
+        UserWarning,
+        match="The property `output_path_prefix` is deprecated, "
+        "please use `output_path`.",
+    ):
+        assert sink.output_file == output_file