Accounting / July 18, 2018 / Willow Mccoy
The cash flow to debt ratio reveals the ability of a business to support its debt obligations from its operating cash flows. This is a type of debt coverage ratio. A higher percentage indicates that a business is more likely to be able to support its existing debt load. The calculation is to divide operating cash flows by the total amount of debt. The total amount of debt includes short-term debt, the current portion of long-term debt, and long-term debt.
A lender may offer you an unsecured amount of funds available for your business to draw on when capital is needed. This line of credit is considered a short-term funding option, with a maximum amount available. This pre-approved pool of money is appealing because it gives you quick access to the cash.
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