Cash Available For Debt Service - CADS
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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.
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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.
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This ratio represents an important factor of shareholders' returns - find out how to analyze it!
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If a company is strong enough to survive tough times, it is more likely to provide long-term value.
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