Collection Period to Payment Period Ratio

Collection Period to Payment Period = collection period / payment period. Collection period to payment period ratio explanation and definition: The collection period to payment period above 1:1 (100%) indicates that suppliers are being paid more rapidly than the company Read More

Cash Turnover Ratio

Cash Turnover = (cost of sales {excluding depreciation}) / cash. Cash Turnover Ratio = (365 days)/ cash balance ratio. Cash turnover ratio definition and explanation: The cash turnover ratio indicates the number of times that cash turns over in a Read More

Cash Reinvestment Ratio

Cash Reinvestment Ratio = increases in fixed assets and working capital / (net income + depreciation). Cash reinvestment ratio definition and explanation: This ratio indicates the degree to which net income is absorbed (reinvested) in the business. A cash reinvestment Read More

Cash Maturity Coverage Ratio

Cash Maturity Coverage = (cash flow from operations – dividends) / current portion of long term maturities. Cash maturity coverage ratio definition and explanation: The cash maturity coverage ratio indicates the ability to repay long term maturities as they mature. Read More

Cash Dividend Coverage Ratio

Cash Dividend Coverage = (cash flow from operations) / dividends. Cash dividend coverage ratio definition and explanation: The cash dividend coverage ratio reflects the company’s ability to meet dividends from operating cash flow. A cash dividend coverage ratio of less Read More

Cash Breakeven Point

Cash Breakeven Point = (fixed costs – depreciation) / contribution margin per unit. Cash breakeven point definition and explanation: The cash breakeven point indicates the minimum amount of sales required to contribute to a positive cash flow. The cash breakeven Read More

Breakeven Point

Formula to calculate breakeven point: Breakeven Point = fixed costs / contribution margin. Breakeven point definition and explanation: The breakeven point is the point at which a business breaks even (incurs neither a profit nor a loss) The breakeven point Read More

Average Obligation Period Ratio

Formula to calculate average obligation period: Average Obligation Period = accounts payable / average daily purchases. Average obligation period definition and explantion: The average obligation period ratio measures the extent to which accounts payable represents current obligations (rather than overdue Read More

EBIT to Sales Ratio

Formula to calculate ebit to sales ratio: EBIT to Sales = (earnings before interest and taxes) / sales. EBIT to sales ratio definition and explanation: The EBIT to sales ratio determines whether the fixed costs are too high for the Read More

Debt Service Coverage Ratio

Formula to calculate debt service coverage ratio: Debt Service Coverage Ratio = net operating income / (interest + current portion of LTD) Debt service coverage ratio definition and explanation: The debt service coverage ratio is also known as the debt Read More