Free · Business valuation and cash flow

Operating Cash Flow / Debt Coverage

Compare operating cash flow with debt and calculate the reciprocal debt-to-cash-flow ratio using the same reporting period.

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How to use this calculator

  1. Enter the known values in the units shown. Results update as you type.
  2. Where results are editable, change one to solve backwards. Lock a value to hold it fixed.
  3. Use the worked example to check the method. Reset restores the starting fields.

Use the result with context

Results are estimates for planning and education. Confirm rates, taxes, fees, and legal requirements with the relevant institution or a qualified professional before making a financial decision.

Formula and method

Operating cash flow of 200 and debt of 1,000 give cash-flow-to-debt of 20% and debt-to-cash-flow of 5 reporting periods.

Cash-flow-to-debt = operating cash flow ÷ total debt; reciprocal = total debt ÷ operating cash flow

Worked example

Enter these known values and leave the other values blank.

Operating cash flow for the reporting period
200 USD
Short-term debt
300 USD
Long-term debt
700 USD
Total debt
1000 USD
Operating cash flow / debt
20 %
Debt / operating cash flow — reporting periods
5

Assumptions and limitations

  • Total debt must be positive. Short- and long-term debt components must be nonnegative.
  • Use cash flow for a stated period. The reciprocal is in those periods, not automatically years.
  • The reciprocal assumes all positive operating cash flow could go to debt and ignores interest, investment, dividends and other obligations; it is not a repayment schedule.
  • At zero cash flow the coverage ratio is zero and its reciprocal is undefined. Use one currency and scale throughout; currency selectors use fixed captured rates, not live exchange rates.

Common questions

Does a ratio of 5 mean five years to repay debt?

Only as a simplified ratio when the cash flow covers one year. It does not model actual repayments or competing cash needs.

Can I use quarterly cash flow?

Yes, but the reciprocal then represents quarters under the constant-cash-flow assumption.

References

Debt components represent nonnegative amounts, while signed operating cash flow remains supported.

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