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 = (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 = 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 = (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 = (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 = (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
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
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
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
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
