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