Cash Flow from Operations to Net Income = (cash flow
from operations) / net income The cash flow from operations to net incomes ratio indicates the extent to which net income generates cash in a business. A decline in the cash flow from operations to net income ratio indicates a cash flow problem.
Cash Flow for Investing to Cash Flows from Operating and Financing
Cash Flow from Investing to Operating and Financing = cash flows from investing / (cash flows fro operations + cash flows from financing)
This ratio compares the funds needed for investment to the funds obtained from financing and operations.
Cash Flow from Sales to Sales Ratio
Cash Flow from Sales to Total Sales = (cash flow from operations - dividends) / total sales
The cash flow from sales to sales ratio indicates the degree to which sales generate cash retained by the business.
A positive cash flow from sales to sales ratio means that sales are generating cash flow.
Cash Flow Coverage Ratio
Formula to calculate cash flow coverage ratio:
Cash Flow Coverage Ratio = net income + depreciation and amortization/total debt payments.
Cash flow coverage ratio definition and explanation: The cash flow coverage ratio indicates the ability to make interest and principal payments as they become due. A cash flow coverage ratio of less than one indicates bankruptcy within two years.
Cash Flow to Long Term Debt Ratio
Cash Flow to Long Term Debt = cash flow / long term debt The cash flow to long term debt ratio appraises the adequacy of available funds to pay obligations.
Operations Cash Flow to Current Liabilities Ratio
Operations Cash Flow to Current Liabilities = cash flow from operations / current liabilities
If the operations cash flow to current liabilities ratio keeps increasing, it may indicate that cash inflows are increasing and need to be invested.
Operations Cash Flow Plus Interest to Interest Ratio
Operations Cash Flow Plus Interest to Interest = (cash flow from operations + interest) / interest This ratio indicates the cash actually available to meet interest charges. A ratio of less than 1:1 (100%) indicates insufficient cash flow is being generated to meet current interest payments