Cash flow coverage ratio(redirected from Cash Flow Coverage Ratios)
Cash flow coverage ratio
Cash Flow Coverage Ratio
The ratio of a company's annual earnings before interest and taxes to its annual debt service and other liabilities. These liabilities may include preferred dividends and rent. Banks use the cash flow coverage ratio to help determine whether to make or refinance loans. A cash flow coverage ratio equal to or greater than one indicates that the debtor is able to service the debt on its profit. See also: Debt-service coverage ratio.