Cash Flow to Current Portion of Long-Term Debt

    Cash Flow to CPLTD = Net Income + Depreciation + Amortization
                                             Current Portion of Long-Term Debt
 
The Cash Flow to Current Portion of Long-Term Debt ratio measures the coverage of next year’s principal payments by last year’s cash available to service them (using accrual accounting.)  For Smith Heating and Cooling, Inc., cash flow coverage of current portion of long-term debt is 2.41 times.
 
Keep in mind that this measurement excludes interest payment coverage; although, the cash flow available is calculated after last year’s interest expense has been deducted.  Also, this calculation of “cash flow” may not necessarily represent the company’s true cash available.
Posted by Ken Pirok at 8/4/2008 4:04 PM
Categories: Ratios, Cash and Cash Flow, Coverage
 

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