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the company will be in a position to settle its debts with the existing operating cash
A higher ratio indicates that a company is better able to pay back its obligations.
The higher the percentage ratio, the better the company's ability to carry its total debt.
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.
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.
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.
It is able to cover the expenses and the company's debt
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.
A higher ratio indicates organisations capacity to meet its debt obligations.
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.
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.
