Tag: Coverage Ratio

Coverage Ratio is a financial metric used to gauge the ability of a company or organization to meet its financial obligations. It is a comparison between the total liabilities and the total assets, which is then divided by the total assets. This ratio gives the investors an idea of how much of the company’s or organization’s assets are available to pay off debts. Coverage Ratio is an important measure for assessing a company’s liquidity and solvency position. It is also used to compare financial ratios across companies and industries.

Cash

Cash Debt Coverage Ratio: How to Analyze Financial Health of a Business

Cash Debt Coverage Ratio: How to Analyze Financial Health of a Business
5 min read

The Cash Debt Coverage Ratio (CDCR) is a measure of a company’s ability to cover its debt obligations from its cash flow. It compares the cash flow available to the company (measured by operating income or earnings before interest, tax, depreciation and amortization) to its total debt obligations. A higher coverage ratio indicates that the company is better able to meet its debt obligations while a lower ratio suggests that it may experience difficulties in making payments. The CDCR is a useful tool for investors when evaluating companies in the forex market. It provides a quick view of a firm’s financial strength and its ability to handle the risk involved with issuing debt.