What is a Current Cash Debt Coverage Ratio?
The current cash debt coverage ratio is one example of a cash-basis ratio. Essentially, the ratio provides a means of identifying the current rate of cash flow while making allowances for the shift in liabilities from one portion of the period to the next. Evaluating the cash flows and their sources, along with calculating the average current liabilities for the period cited, helps to identify any potential problems in the flow of operating capital before the issue has a chance to escalate. Part of the beauty of a current cash debt coverage ratio is that it takes very little to calculate the figure as it applies to a given time period. The formula involves identifying the net cash that has been generated by various operating activities and dividing the net cash by the average current liabilities as they stand for the same time frame. The resulting figure can tell a great deal about the overall financial health of the company, and how the current status compares to the debt coverage rat
