Cash Flow Coverage Ratio Calculator

Cash Flow Coverage Ratio Calculator is a tool that helps in calculating whether a company’s cash flows from its operations can pay off its debt. This ratio is useful for creditors, banks, investors, and managers of the company to get an idea of how well the company is performing financially. The cash flow coverage ratio is a ratio of operating cash flow to its debt. It determines the liquidity as well as repayment position of a company.

The formula for calculating the cash flow coverage ratio is:

Cash Flow Coverage Ratio = Operating Cash Flow / Total Debts Payable During the Year

Cash Flow Coverage Ratio Calculator

How to Calculate Using a Calculator?

In order to calculate the cash flow coverage ratio using a calculator, the user has to simply insert the following data into the calculator:

Operating Cash Flow Operating cash flow determines the company’s cash flows from its operations. This figure can be obtained from the cash flow statement of the company. Also, the formula to calculate operating cash flow is as follows:

Operating Cash Flow = EBIT (+/-) Changes in Working Capital (+/-) Non-cash Items – Tax

Total Debt – The total debt of a company includes the borrowings of the company. Both the principal amount and the interest due on such amount for the period under calculation are to be considered for computing the cash flow coverage ratio. We can also call it the cash flow to debt ratio.

Sanjay Borad

Sanjay Bulaki Borad

MBA-Finance, CMA, CS, Insolvency Professional, B'Com

Sanjay Borad, Founder of eFinanceManagement, is a Management Consultant with 7 years of MNC experience and 11 years in Consultancy. He caters to clients with turnovers from 200 Million to 12,000 Million, including listed entities, and has vast industry experience in over 20 sectors. Additionally, he serves as a visiting faculty for Finance and Costing in MBA Colleges and CA, CMA Coaching Classes.

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