Cash flow coverage ratio

(redirected from Cash Flow Coverage Ratios)

Cash flow coverage ratio

The number of times that financial obligations (for interest, principal payments, preferred stock dividends, and rental payments) are covered by earnings before interest, taxes, rental payments, and depreciation.

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.
References in periodicals archive ?
The speculative-grade rating of Community Distributors is based on its highly leveraged balance sheet and thin cash flow coverage ratios, along with rising profit pressure and competition.
While the holding company debt is noncash paying until 2004, ratings could be lowered if anticipated EBITDA growth is not achieved over the next year or two, or if future debt-financed acquisitions restrict improvement in cash flow coverage ratios, Standard & Poor's said.
The downgrade of Aon's ratings are based on the increased higher leverage and recent decline in cash flow coverage ratios of the firm.
Commonly relied on earnings and cash flow coverage ratios alone may give lagging, upwardly biased, inaccurate readings of pipeline credit strength or weakness.
As a result, EBIT, EBITDA and operating cash flow coverage ratios are estimated to fall well below investment grade norms, in 2001.
The above positive factors are partially offset by relatively high debt/leverage levels arising from the CSW acquisition and consequently weaker interest and cash flow coverage ratios.
The above positive factors are partially offset by relatively high debt/leverage levels arising from the CSW acquisition and, consequently, weaker interest and cash flow coverage ratios.
In 2002, WR's consolidated EBIT, EBITDA and cash flow coverage ratios are expected to approximate 1.
The company's cash flow coverage ratios, namely its CFO interest coverage and debt service coverage ratio declined to 2.
Finally, banks usually monitor cash flow, and will often prescribe cash flow coverage ratios (for example, cash flow during any given period must be a minimum of X times interest, or Y times principal and interest).
credit-rating agency attributed the review to Yamaha's strong operating performance and also to an improvement in cash flow coverage ratios, supported by the rapidly growing Asian market and its ongoing rationalization efforts.
The ratings of the Southern Company (Southern) are supported by strong consolidated cash flow coverage ratios, steady dividend payments from subsidiaries with solid operating performance in supportive state regulatory environments, modest double leverage at the holding company level, and skillful execution of the relatively low-risk business strategy.