Accounting / July 19, 2018 / Ariyah Lang
The cash flow-to-debt ratio examines the ratio of cash flow to total debt. Analysts sometimes also examine the ratio of cash flow to just long-term debt. This ratio may provide a more favorable picture of a company's financial health if it has taken on significant short-term 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.
Asset retirement obligation involves the retirement of a tangible, long-lived asset that depends on a future event beyond the control an obligated party. It is an accounting rule and legal obligation meant to account for the cost of returning a piece of property to its original condition. Asset retirement obligation (ARO) is an essential part of producing fair and accurate financial statements so those viewing them can have a better idea of a company's obligations, and therefore its overall value.
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