Sunday, August 24, 2014

Cash Flow Indicator Ratios: Cash Flow Coverage Ratio

Series : Ratio Analysis    (22 th Post)         

Is the company generating enough cash to meet its Liabilities & fund operating cost ?
This ratio helps us to understand  the ability of the company  Operating cash flow(Cash flow generated from main operations ) to meet its obligations which  includes Liabilities and to keep the business funded.
Ideally larger the ratio the better.

Formula: Short Term Debt Coverage: Operatinng Cash Flow/Short Term Debt
Capital Expenditure Coverage=Operating Cash Flow/ Capital Expenditure
Divident Coverage=Operating Cash flow/Cash Dividents

Next Post on Ratio Analysis:   Cash Flow Indicator Ratios: Dividend Payout Ratio

In my quest for learning value investing I came across Ratio Analysis & the importance of these ratios in analyzing a stock these ratios are easy to understand & give very good insights into a companys operations and its growth , would like to share this with the community
Comments  /  Improvements and points worth considering are welcome

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