CHAPTER FOUR
Cash Flow Measurements
THOUGH MANY OF THE other ratios in this book are useful for determining a company's performance level in a variety of areas, the core issue is whether there is enough cash flowing from ongoing operations to sustain the company. This chapter deals with a variety of measurements that involve a company's cash flow. If a performance measure in this chapter yields a poor result, then action must be taken at once to ensure that corporate survival is maintained. The measures here can also be combined with the liquidity measures noted in Chapter 5. The cash flow measures in this chapter are:
| Cash Flow from Operations Free Cash Flow Cash Flow Return on Sales Fixed Charge Coverage Expense Coverage Days Cash Flow Coverage Ratio Cash Receipts to Billed Sales and Progress Payments Cash to Current Assets Ratio | Cash Flow to Fixed Asset Requirements Cash Flow Return on Assets Cash to Working Capital Ratio Cash Reinvestment Ratio Cash to Current Liabilities Ratio Cash Flow to Debt Ratio Reinvestment Rate Stock Price to Cash Flow Ratio Dividend Payout Ratio |
CASH FLOW FROM OPERATIONS
Description: Under generally accepted accounting principles, a company can easily report a large income figure, even while its cash reserves are draining away. The cash flow from operations ratio can be used to determine the extent to which cash flow differs from the reported level of either operating income or net income. Any difference in the ratio that varies significantly ...
