Liquidity and Cash-Flow Coverage Ratios

This branch groups ratios that test whether the company can cover short-term obligations, interest, and asset spending from liquid resources or operating cash.

In this section

• Cash Flow Coverage Ratio: How Well Operating Cash Flow Supports Debt Obligations
  Learn what the cash flow coverage ratio measures, why it is more cash-focused than earnings ratios, and how lenders use it in credit analysis.
• Cash Flow to Capital Expenditure Ratio: Can the Business Fund Its Own Asset Spending?
  Learn what the cash flow to capital expenditure ratio measures, why definition choices vary, and how analysts use it to judge whether capex is being internally funded.
• Current Ratio
  Liquidity ratio comparing current assets with current liabilities to gauge short-term balance-sheet coverage.
• Defensive Interval Ratio: Financial Liquidity Measure
  A financial ratio that measures a business’s ability to sustain operations using its current liquid assets, without relying on upcoming sales revenue.
• Interest Coverage Ratio: Can Earnings Cover Interest Expense?
  Learn what the interest coverage ratio measures, how to calculate it, and why lenders and analysts use it to judge debt-servicing capacity.
• Operating Cash Flow Ratio
  Understand operating cash flow ratio as a liquidity measure that compares cash generated from operations with short-term liabilities.