Q6. List of cash flow ratios
What are the key financial ratios to analyze the cash flow of an entity?
A6.
Cash flow ratios are calculated as follows:
(1) Cash flow return on assets (Cash flow ROA)
= Cash flows from operating activities / Average total assets
(2) Current debt to cash flow ratio
= Current liabilities / Cash flows from operating activities
(3) Debt to cash flow ratio
= Total liabilities / Cash flows from operating activities
(4) Free cash flow
= Cash flows from operating activities – Capital expenditures – Cash dividends
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