What Is a Cash-on-Cash Yield?

The cash income ratio is reflected in the income realized by the enterprise, and the proportion of cash income, that is, how much of the net profit realized in the current period is guaranteed by cash. This indicator is of great significance for measuring the profit quality of the enterprise.

Cash income ratio

Cash income ratio =	Net operating cash flow / net profit

When designing cash income ratio indicators. If you consider that part of the current profit is generated by non-cash costs less depreciation, and this part of the cost is ultimately to be compensated by cash, you can deduct the depreciation expenses from the net operating cash flow, so that adjusted operating The calculated ratio of net cash flow is a more robust measure of the quality of a company's long-term profit.