Cash Flow to Debt Ratio Calculator

Calculate Cash Flow to Debt Ratio



Formula

The formula to calculate the Cash Flow to Debt Ratio is:

\[ R = \frac{OCF}{TD} \]

Where:

What is Cash Flow to Debt Ratio?

The cash flow to debt ratio is a financial metric that measures a company’s ability to cover its total debt with its operating cash flow. This ratio is crucial for investors and creditors as it indicates the financial health and risk level of a company. A higher ratio suggests that the company generates sufficient cash flow to meet its debt obligations, while a lower ratio may indicate potential liquidity issues.

Example Calculation 1

Let's assume the following values:

Using the formula:

\[ R = \frac{500000}{1000000} = 0.50 \]

The Cash Flow to Debt Ratio is 0.50.

Example Calculation 2

Let's assume the following values:

Using the formula:

\[ R = \frac{750000}{1500000} = 0.50 \]

The Cash Flow to Debt Ratio is 0.50.