🔥 7 Cash Flow Ratios Every Investor Should Know

1️⃣ Operating Cash Flow Ratio (OCF Ratio)

Formula: Operating Cash Flow ÷ Current Liabilities

🔍 Shows how easily a company can cover short-term debts using real cash — not accounting tricks.

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2️⃣ Free Cash Flow (FCF) to Sales

Formula: Free Cash Flow ÷ Net Sales

💡 Measures how much actual cash profit a company generates from each dollar of revenue.

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3️⃣ Cash Flow Margin

Formula: Operating Cash Flow ÷ Net Sales

📈 Higher margin = stronger cash generation and healthier business operations.

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4️⃣ Cash Return on Assets (CROA)

Formula: Operating Cash Flow ÷ Total Assets

🚀 Tells you how efficiently the company uses its assets to generate cash.

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5️⃣ Cash Return on Equity (CROE)

Formula: Free Cash Flow ÷ Shareholders’ Equity

💰 Shows cash profitability for shareholders — better than accounting-based ROE.

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6️⃣ Free Cash Flow to Debt Ratio

Formula: Free Cash Flow ÷ Total Debt

⚠️ A key solvency metric — higher values mean the company can pay off debt faster and safer.

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7️⃣ Cash Flow Coverage Ratio

Formula: (Operating Cash Flow + Interest + Taxes) ÷ Interest Payments

🛡️ Measures a company’s ability to service interest obligations with real cash.