Wednesday, August 6, 2014

Debt Ratios: Cash Flow To Debt Ratio

Series : Ratio Analysis    (15 th Post)

This Ratio helps us to understand the how easily a company can pay its Debt from the Operating Cash Flow its generates or ratio provides an indication of a companys ability to cover total debt with its yearly cash flow from Operations.

A low Cash Flow to debt ratio means company is not able to available to meet its debt payments. The Higher the percentage Ratio the better the companys ability  to carry out its total debt.

Formula:  Cash Flow to Debt Ratio % = Operating Cash Flow  /  Total Debt

Next Post on Ratio Analysis:  Operating Performance Ratios

In my quest for learning value investing I came acrros this interesting article and thought would like to share this with the community
Comments  / Improvements and points worth considering are welcome

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