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cash flow
what is cash flow coverage ratio? how it can be calculated
The cash flow coverage ratio is an indicator of the ability of a company to pay interest and principal amounts when they become due. This ratio tells the number of times the financial obligations of a company are covered by its earnings. A ratio equal to one or more than one means that the company is in good financial health and it can meet its financial obligations through the cash generated by operating activities. A ratio of less than one is an indicator of bankruptcy/reference/analysis/bankruptcy.html of the company within two years if it fails to improve its financial position.
what is the formula to calculate it?
please go through this article on . it is worth reading and also give details regarding calculations.
formula is as follows
Cash Flow Coverage Ratio = Operating Cash Flows / Total Debt
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