Cash flow coverage ratio

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 ?
50% and is secured by the company's vessel, with a cash flow coverage ratio of 1.
The additional bonds test requires a cash flow coverage ratio of at least 1.
The master indenture requires a cash flow coverage ratio of at least 1.
5 times (x) debt to operating cash flow coverage ratio limit through Dec.
In Fitch's opinion, under a reasonable range of stress scenarios, Marsh's cash flow coverage ratio - measured as pretax earnings before interest, depreciation and amortization expense (EBITDA) relative to total interest costs - will likely to drop to within a range of 4-8 times (x) in the foreseeable future.
Overall, Fitch's 'B-' senior unsecured rating reflects the company's high debt balance relative to cash flow, modest cash flow coverage ratio, significant working capital requirements, and current state level budgetary pressures.
Fitch acknowledges this improvement and expects that Aon will maintain its cash flow coverage ratio in the 5.
Fitch's ratings reflect the company's high debt balance relative to cash flow, modest cash flow coverage ratio, significant working capital requirements, as well as smaller size and overall weaker credit metrics compared to the other three major U.
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 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.