The operating cash flow to capital expenditures ratio in excess of 1.0 means that the firms' current operating activities are providing cash in excess of the amount needed to provide the desired level of plant capacity.

Question

Quizplus · Accepted Answer

Since the operating cash flow to capital expenditures ratio is defined as operating cash flows divided by capital expenditures, firms with ratios greater than 1.0 have operating cash flows that exceed capital needs to acquire long-term assets.

The Operating Cash Flow to Capital Expenditures Ratio in Excess