A measure of a company's financial flexibility is the
A) cash debt coverage ratio.
B) current cash debt coverage ratio.
C) free cash flow.
D) cash debt coverage ratio and free cash flow.

Question

Quizplus · Accepted Answer

The cash debt coverage ratio and free cash flow are both measures of a company's financial flexibility. The cash debt coverage ratio assesses the ability of a company's operating cash flow to cover its debts, indicating how well the company can repay its debts from its operations without needing external financing. Free cash flow represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets, indicating the amount of cash available for expansion, dividends, or debt repayment. Both metrics provide insights into a company's financial health and flexibility.

A Measure of a Company's Financial Flexibility Is the