The cash flow adequacy ratio is computed as

Question

Quizplus · Accepted Answer

The cash flow adequacy ratio is calculated by dividing the cash generated from operations by the cash used for capital expenditures. This ratio is used to determine a company's ability to generate enough cash from operations to fund its capital expenditures, which is essential for its growth and sustainability. Therefore, the correct choice is C, Cash from operations divided by Cash paid for capital expenditures. The other options are incorrect because they do not accurately reflect a company's ability to fund its capital expenditures.

The Cash Flow Adequacy Ratio Is Computed as