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What impact does a higher cash flow to debt ratio have to a company?

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Question added by Amar Raveendran , treasury manager , AST Enterprises Inc
Date Posted: 2016/06/17
Mariam Rashid
by Mariam Rashid , Assistant accountant , Kenya Red Cross Society-Kwale branch

the company will be in a position to settle its debts with the existing operating cash

Harishkumar Adukadukam
by Harishkumar Adukadukam , Finance Manager , CODE Group

A higher ratio indicates that a company is better able to pay back its obligations.

Amar Raveendran
by Amar Raveendran , treasury manager , AST Enterprises Inc

The higher the percentage ratio, the better the company's ability to carry its total debt.

Michael Mudzengi
by Michael Mudzengi , Group Accountant , Birmingham invest Proprties Ltd

The cash flow to debt ratio shows the company's abiility to settle its debts from its operating cashflow. 

The higher percentage show that the company is most likeley to meet it debt obligations.

Mohammed Fawzi
by Mohammed Fawzi , Internal Audit Section Head , Nesma Holding LTD

Higher  cash Flow  to debit ratio indicates that a company is better able to pay back its debt, and is thus able to take on more debt if necessary.

IBRAR KHAN
by IBRAR KHAN , ACCOUNTS AND COST EXECUTIVE , IMA-PG INDIA PRIVATE LIMITED

THE DEBT RATIO IS TOTAL LIABILITIES/TOTAL ASSETS, SO HIGHER CASH FLOW DOES NOT MAKE ANY IMPACT ON DEBT RATIO BUT IT IS GOOD FOR COMPANY TO PAY BACK ITS OBLIGATION.

amina Hakem
by amina Hakem , asistance cash , petroser

 

It is able to cover the expenses and the company's debt

Neeraja Lakshmi Ragesh
by Neeraja Lakshmi Ragesh , Software Engineer - Odoo Developer and Quality Responsible , Libatel

The cash flow-to-debt ratio provides a snapshot of the overall financial of a company.  A high ratio indicates that a company is better able to pay back its debt, and is thus able to take on more debt if necessary.

Jayanarayanan G
by Jayanarayanan G , Assistant Manager - Finance , Modern Freight Company L.L.C

A higher ratio indicates organisations capacity to meet its debt obligations.

Deleted user
by Deleted user

1- Cashflow to Debt ratio=Operating cash flows/Total Debt.

 

2-Higher Cashflow indicates Company is better able to pay back its debts and take more debts if its necessary for business operation.

 

3-This ratio provide the snapshot of the company`s financial health and liquidity position. 

 

 

 

 

 

Pradip Gupta
by Pradip Gupta , Director of Finance & Investments , Meritas Management WLL

Cash Flow to Debt ratio compares a company's operating cash flow to its total debt, the higher the cash flow to its debt is Company ability to cover the debt repayement on time as and when it is fall due. 

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