Cash flow to debt ratio definition


Cash flow to debt ratio shows how much the company earns from its’ core activities per one dollar of debts (total liabilities). Data to calculate this ratio is collected from balance sheet and cash flow statement.

This ratio shows how well a company can cover its’ total debts. Cash flow to debt ratio is important for the company’s creditors (especially long-term creditors).

Norms and limitations

The higher value of the ratio indicates a better ability of the company to cover its’ liabilities.

It is recommended to compare this ratio to those of the companies, working within the same industry.


Operating cash flow (OCF, cash flow from operations) is the money that a company earns from its core business.

Debt (total debt, total liabilities) is calculated by adding together long term debt with short term debt. These two measures can be easily located on the balance sheet.