Cash Available For Debt Service - CADS

AAA

DEFINITION of 'Cash Available For Debt Service - CADS'

A ratio that measures the amount of cash a company has on hand as compared to its debt service obligations. Debt service obligations include all current interest payments due, as well as all current principal repayments due.

INVESTOPEDIA EXPLAINS 'Cash Available For Debt Service - CADS'

Investors generally prefer a company to have a high CADS ratio; the higher the ratio, the more of a cash cushion the company has to fund its upcoming debt service payments. In other words, the higher a company's CADS ratio, the less likely the company will be to default on its debts, making owning its shares much safer for shareholders.

RELATED TERMS
  1. Debt/Equity Ratio

    A measure of a company's financial leverage calculated by dividing ...
  2. Times Interest Earned - TIE

    A metric used to measure a company's ability to meet its debt ...
  3. EBITDA-To-Interest Coverage Ratio

    A ratio that is used to assess a company's financial durability ...
  4. Current Liabilities

    A company's debts or obligations that are due within one year. ...
  5. Coverage Ratio

    A measure of a company's ability to meet its financial obligations. ...
  6. Interest Coverage Ratio

    A ratio used to determine how easily a company can pay interest ...
RELATED FAQS
  1. How is accounting in the United States different from international accounting?

    Despite major efforts by the Financial Accounting Standards Board, or FASB, and the International Accounting Standards Board, ... Read Full Answer >>
  2. Which financial statements are most important when performing ratio analysis?

    Financial ratio analysis is an important aspect of fundamental analysis for any party engaged in value investing. Financial ... Read Full Answer >>
  3. How do you account for changes in the market value of various fixed assets?

    A company can account for changes in the market value of its various fixed assets by conducting a revaluation of the fixed ... Read Full Answer >>
  4. What is the difference between direct costs and variable costs?

    Direct costs and variable costs are expenses associated with production. Direct costs are expenses that can be directly traced ... Read Full Answer >>
  5. Why is reconciliation important in accounting?

    Reconciliation is an accounting process that proves and documents that account balances are in agreement. It's a fundamental ... Read Full Answer >>
  6. How does the Fair Accounting Standards Board (FASB) regulate deferred tax liabilities?

    The Financial Accounting Standards Board (FASB) requires that deferred tax liabilities be recognized whenever there is a ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Do Your Investments Have Short-Term Health?

    If a company is strong enough to survive tough times, it is more likely to provide long-term value.
  2. Bonds & Fixed Income

    Why Interest Coverage Matters To Investors

    This ratio represents an important factor of shareholders' returns - find out how to analyze it!
  3. Economics

    Understanding Carrying Value

    Carrying value is the value of an asset as listed on a company’s balance sheet. Carrying value is the same as book value.
  4. Economics

    International Financial Reporting Standards (IFRS)

    International Financial Reporting Standards are accounting rules and guidelines governing the reporting of different types of accounting transactions.
  5. Economics

    Explaining Property, Plant and Equipment

    Property, plant and equipment are company assets that are vital to business operations, but not easily liquidated.
  6. Economics

    How to Calculate Trailing 12 Months Income

    Trailing 12 months refers to the most recently completed one-year period of a company’s financial performance.
  7. Economics

    What is Unearned Revenue?

    Unearned revenue can be thought of as a "pre-payment" for goods or services which a person or company is expected to produce to the purchaser.
  8. Investing Basics

    What is Capital Stock?

    Capital stock refers to the number of authorized shares a corporation may issue, both common and preferred.
  9. Economics

    Explaining Working Capital Turnover

    Working capital turnover is a ratio that helps show how efficiently a company is generating revenue per dollar of cash available to spend on operations.
  10. Economics

    What is Net Margin?

    The ratio of net profits to revenues for a company that shows how much of each dollar earned by the company is translated into profits.

You May Also Like

Hot Definitions
  1. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  2. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  3. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  4. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  5. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  6. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
Trading Center