Financial Ratios


Cash Flow Indicator Ratios

Operating Cash Flow Sales Ratio OperatingCashFlowRevenue\dfrac{Operating Cash Flow}{Revenue} - Gives investors an idea of the company's ability to turn sales into cash.
Free Cash Flow Operating Cash Flow Ratio FreeCashFlowOperatingCashFlow\dfrac{Free Cash Flow}{Operating Cash Flow} - The higher the percentage of free cash flow embedded in a company's operating cash flow, the greater the financial strength of the company.
Cash Flow Coverage Ratios OperatingCashFlowTotalDebt\dfrac{Operating Cash Flow}{Total Debt} - The operating cash flow is simply the amount of cash generated by the company from its main operations, which are used to keep the business funded.
Short-Term Coverage Ratios OperatingCashFlowShortTermDebt\dfrac{Operating Cash Flow}{Short-Term Debt} - The short-term debt coverage ratio compares the sum of a company's short-term borrowings and the current portion of its long-term debt to operating cash flow.
Capital Expenditure Coverage Ratios OperatingCashFlowCapitalExpenditure\dfrac{Operating Cash Flow}{Capital Expenditure} - The larger the operating cash flow coverage for these items, the greater the company's ability to meet its obligations, along with giving the company more cash flow to expand its business, withstand hard times, and not be burdened by debt servicing and the restrictions typically included in credit agreements.
Dividend Paid and Capex Coverage Ratios OperatingCashFlowDividendPaid+CapitalExpenditure\dfrac{Operating Cash Flow}{Dividend Paid + Capital Expenditure} - For conservative investors focused on cash flow coverage, comparing the sum of a company's capital expenditures and cash dividends to its operating cash flow is a stringent measurement that puts cash flow to the ultimate test. If a company is able to cover both of these outlays of funds from internal sources and still have cash left over, it is producing what might be called "free cash flow on steroids". This circumstance is a highly favorable investment quality.
Dividend Payout Ratio DPS(DividendperShare)EPS(NetIncomeperShareNumber\dfrac{DPS (Dividend per Share)}{EPS (Net Income per Share Number} - The dividend payout ratio is an indicator of how well earnings support the dividend payment.