Send us Feedback

Cash Flow Adequacy Ratio

more ▼WIKI ANALYSIS
This article is part of WikiProject Definitions. Consider editing to improve it. View articles referencing this definition.
 

Cash Flow Adequacy Ratio indicates a company's capability of covering capital expense, debt repayment and dividends from cash flow generated from operating activities.

It is calculated as -

Cash Flow Adequacy Ratio = (Cash Flow from Operations) / ( Long-term debt paid + Fixed assets purchased + Cash dividends distributed)

Significance:

Cash flow adequacy is the primary measure of cash sufficiency. This performance ratio should have a value of 1 or higher. A ratio of 1 or more indicates that the company's operations produce sufficient cash to meet necessary business obligations.A ratio of less than one indicates potential liquidity problems.

Retrieved from "http://www.wikinvest.com/wiki/Cash_Flow_Adequacy_Ratio"
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki