Cash flow-to-debt ratio measures:
A)the amount of dividends paid out to common shareholders.
B)the amount the cash flow available over a period to cover a firm's outstanding debt
C)the amount of income and expenditures financed with debt.
D)none of the above.

Question

Quizplus · Accepted Answer

The cash flow-to-debt ratio measures how much cash flow a company has to cover its outstanding debt over a certain period of time. It is calculated by dividing a company's cash flow from operations by its total debt. The ratio shows how easily a company can pay off its debt with its available cash flow.

Cash Flow-To-Debt Ratio Measures