💰 Cash Flow to Debt Ratio Calculator
Calculate cash flow to debt ratio
Cash flow from operating activities
How to Use This Calculator
Enter Operating Cash Flow
Input the operating cash flow from the cash flow statement - cash flow from operating activities.
Enter Total Debt
Enter the total debt - all outstanding debt obligations including short-term and long-term debt.
Review Cash Flow to Debt Ratio
See the cash flow to debt ratio - the percentage of debt that can be covered by operating cash flow. Higher ratios indicate better ability to service debt. Also see years to pay off debt at current cash flow levels.
Formula
Cash Flow to Debt Ratio = Operating Cash Flow / Total Debt
Years to Pay Off Debt = Total Debt / Operating Cash Flow
Example Calculation:
If operating cash flow $500,000, total debt $2,000,000:
• Cash flow to debt ratio = $500,000 / $2,000,000 = 0.25 (25%)
• Years to pay off = $2,000,000 / $500,000 = 4 years
About Cash Flow to Debt Ratio Calculator
A cash flow to debt ratio calculator helps you calculate the cash flow to debt ratio, which measures a company's ability to pay off its debt using operating cash flow. The ratio is calculated as Operating Cash Flow / Total Debt. Higher ratios indicate better ability to service debt and pay off debt. This ratio is an important metric for assessing debt capacity, financial health, and creditworthiness. It shows how much of the debt can be covered by operating cash flow.
When to Use This Calculator
- Debt Analysis: Assess ability to service debt
- Financial Health: Evaluate financial health and creditworthiness
- Investment Analysis: Analyze company financial strength
- Credit Analysis: Assess credit risk
Understanding Cash Flow to Debt Ratio
- Higher Ratio: Better ability to service debt (generally good)
- Lower Ratio: Lower ability to service debt (may indicate risk)
- Industry Standards: Ratios vary by industry
- Trend Analysis: Monitor trends over time
Why Use Our Calculator?
- ✅ Debt Analysis: Calculate cash flow to debt ratio accurately
- ✅ Financial Health: Assess financial health and creditworthiness
- ✅ Investment Analysis: Analyze company financial strength
- ✅ Credit Analysis: Assess credit risk
- ✅ 100% Free: No registration or payment required
Frequently Asked Questions
What is cash flow to debt ratio?
Cash flow to debt ratio measures a company's ability to pay off its debt using operating cash flow. It's calculated as Operating Cash Flow / Total Debt. Higher ratios indicate better ability to service debt and pay off debt. For example, a ratio of 0.25 (25%) means operating cash flow covers 25% of total debt. This ratio is an important metric for assessing debt capacity, financial health, and creditworthiness.
What's a good cash flow to debt ratio?
A higher ratio is generally better, as it indicates better ability to service debt. However, the "good" ratio depends on the industry and business model. Generally, ratios above 20% are considered strong, 10-20% are moderate, and below 10% may indicate risk. Compare to industry benchmarks and historical trends. The ratio should be considered alongside other financial metrics.
How is this different from debt-to-equity ratio?
Cash flow to debt ratio measures ability to pay debt using cash flow, while debt-to-equity ratio measures capital structure (debt relative to equity). Cash flow to debt ratio focuses on cash flow capacity to service debt, while debt-to-equity ratio focuses on leverage and financial structure. Both ratios are important for financial analysis but measure different aspects of financial health.
Why is cash flow to debt ratio important?
Cash flow to debt ratio is important because it measures the ability to service debt using operating cash flow. It helps: (1) Assess debt capacity and creditworthiness, (2) Evaluate financial health and stability, (3) Analyze ability to pay off debt, (4) Make investment and credit decisions. Higher ratios indicate better ability to service debt and lower credit risk, while lower ratios may indicate financial stress.