What is 'Cash FlowtoDebt Ratio'
The cash flowtodebt ratio is the ratio of a company’s cash flow from operations to its total debt. This ratio is a type of coverage ratio, and can be used to determine how long it would take a company to repay its debt if it devoted all of its cash flow to debt repayment. Cash flow is used rather than earnings because cash flow provides a better estimate of a company’s ability to pay its obligations. The ratio is less frequently calculated using EBITDA or free cash flow.
BREAKING DOWN 'Cash FlowtoDebt Ratio'
While it is unrealistic for a company to devote all of its cash flow from operations to debt repayment, the cash flowtodebt ratio provides a snapshot of the overall financial health of a company. A high ratio indicates that a company is better able to pay back its debt, and is thus able to take on more debt if necessary.
Another way to calculate the cash flowtodebt ratio is to look at a company’s EBITDA rather than cash flow from operations. This option is used less often because it includes investment in inventory, and since inventory may not be sold quickly, it is not considered as liquid as cash from operations. Without further information about the makeup of a company’s assets, it is difficult to determine whether a company is as readily able to cover its debt obligations in the EBITDA method.
Free Cash Flow Instead of Cash Flow From Operations
Some analysts use free cash flow instead of cash flow from operations because that measure subtracts cash used for capital expenditures. Using free cash flow instead of cash flow from operations may, therefore, indicate that the company is less able to meet its obligations.
The cash flowtodebt ratio examines the ratio of cash flow to total debt. Analysts sometimes also examine the ratio of cash flow to just longterm debt. This ratio may provide a more favorable picture of a company's financial health if it has taken on significant shortterm debt. In examining either of these ratios, it is important to remember that they vary widely across industries. A proper analysis should compare these ratios with those of other companies in the same industry.

Free Cash Flow Per Share
On a per share basis, free cash flow per share is cash available ... 
Operating Cash Flow Margin
Operating cash flow margin measures cash from operating activities as ... 
Cash Flow From Investing Activities
Cash flow from investing activities reports the total change ... 
Cash Flow Per Share
Cash flow per share is a measure of a firm's financial strength, ... 
Accounting Ratio
Accounting ratios, also known as financial ratios, are used to ... 
LongTerm Debt To Total Assets ...
The longterm debt to total assets ratio is a measurement representing ...

Investing
Evaluating A Statement Of Cash Flows
The metrics for the Statement of Cash Flows is best viewed over time. 
Investing
Analyzing Verizon's Debt Ratios in 2016 (VZ)
Analyze Verizon's key debt ratios, and understand how the company has been able to expand in recent years by safely increasing its debt load. 
Investing
Analyzing Amgen's Debt Ratios in 2016 (AMGN)
Learn about Amgen Inc. and its key debt ratios, such as the debttoequity ratio, interest coverage ratio and cash flowtodebt ratio. 
Investing
Fundamental Case Study: Is Amazon's Cash Flow Actually Solid? (AMZN)
Review Amazon's cash flow situation, including its free cash flow yield, operating cash flow from organic growth and cash flow from debt financing. 
Investing
Analyzing CocaCola's Debt Ratios in 2016 (KO)
Explore analyses of CocaCola's three key debt ratios in 2016, and learn why the company may be too aggressive in its financial leverage. 
Investing
The Importance of Properly Managing Your Cash Flow
The more cash you have, the more cash flow you can create which builds wealth. 
Investing
Why Goldman Is Warning About Free Cash Flow Yield (GS)
Learn why Goldman Sachs is alerting investors to the importance of cash flow, and discover a recommended alternative equity valuation metric to free cash flow. 
Investing
5 musthave metrics for value investors
In this article, we outline the five ratios that can help value investors find the most undervalued stocks in the market. 
Investing
Key Financial Ratios to Analyze Healthcare Stocks
Examine the health care sector and learn about significant financial ratios used by investors and analysts to evaluate companies.

How are cash flow and free cash flow different?
Both cash flow and free cash flow are financial metrics that measure a company's liquidity, but one shows how effectively ... Read Answer >> 
How should I evaluate a company with negative cash flow investing activities?
Negative cash flow from investing activities should be evaluated since it could be a warning sign. However, it can also mean ... Read Answer >> 
What's the formula for calculating free cash flow?
Free cash flow is the cash left over after a company pays for its operating expenses and capital expenditures. High free ... Read Answer >> 
What factors decrease cash flow from operating activities?
Understand the types of factors that reduce cash flow from operation activities. Discover how declining net income and efficiency ... Read Answer >> 
What is the difference between cash flow and EBIDTA?
Earnings before interest, taxes, depreciation, and amortization (EBITDA) is often used as a synonym for cash flow, however, ... Read Answer >>