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 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).
The agency views the company's business risk profile as strong and its financial risk profile as minimal, despite some weakening in its cash flow coverage ratios in fiscal 2010, which falls within expectations.
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 utility's cash flow coverage ratios are also expected to be strong.
Leverage and cash flow coverage ratios improved through debt reduction.
The rating of PEF is based on the solid cash flow coverage ratios, sound utility operations and historically favorable state regulatory environment in Florida.
The ratings and Rating Watch Positive reflect meaningful debt reduction achieved by management in recent years, ongoing efforts to reduce operating and regulatory risk and projected improvement in 2007 earnings and cash flow coverage ratios.
SPC's ratings reflect the low business risk strategy relative to other wholesale generation companies, the operational benefits and financial flexibility afforded through affiliation with SO, and cash flow coverage ratios that are consistent with the 'BBB+' rating category.
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.
Fitch's upgrade of Xcel's senior unsecured debt rating to 'BBB+' recognizes the company's stable, predictable cash flows from its utilities; consolidated cash flow coverage ratios that are strong relative to the rating category; the low business risk of its rate base growth strategy in markets that have no prospects for retail competition on the horizon; strong regional economic conditions in its larger service territories; and generally constructive regulatory environments.
The affirmation of the 'BB-' senior unsecured rating and Stable Rating Outlook of the group parent, Allegheny, reflects the new management's ongoing progress in restructuring efforts and debt reduction and adequate parent company liquidity, as well as the high consolidated leverage and weak cash flow coverage ratios.