What is a debt cash flow?

Debt cash flow, also known as the ratio of cash flows to debt, is the measure of the incoming financing of the company compared to the total debt due to the total debt. Investors use the ratio of debt cash flows to see if it is safe to invest in a specific company. The analysis of the money flow ratio to debt helps investors to decide whether the company will be able to repay its debts on time. The ratio measures the company's debt compared to its non -breathing cash flow or operating cash flows. A higher cash flow ratio to the total debt is considered evidence that the company is financially healthy, while a lower cash flow indicates low income or high dependence on the loan. In fact, rolling credit is often a standard practice between major corporations. Before investing in such companies, it is important that the investor knows what the company's obligations are and how well it is placed on the hands of the arrears. Debt cash flows provide investors with a mathematical index to measure the company's ability to handle SVé debts without failure or greater debt by resorting to other loans. Since it is a simple ratio, the index can use the index without much interpretation and serious broker.

The ratio of debt cash flows is essentially divided by the company's total operating cash flow by the total debt issued by the Company. The total operating cash flow is defined as a total amount closed by companies, except for the company's own capital, which is part of the company owned by the public. The calculation of the total debt is a bit more complicated. It is a mixture of short -term loans of the company and its long -term debts and periods of each loan and interest. Cash flow ratios to debt are usually improved to take into account other financial indicators.

The ratio of high debt cash flows means that the company is well placed to pay off its loans on time. Is unlikely thatThe company was never debt -free; Regardless of this, companies pay their loans without failure to keep their operations profitable. On the other hand, low -debt cash flow ratios suggest that the company may have difficulty repaying its loans. When the economy slows down, the cash flows dry, but the debts do not disappear, so the ratio of debt cash flows is often used to derive how the company will be in harsh economic conditions.