Which of the following ratios is NOT used to assess the adequacy of cash flows generated through earnings that can be used to meet debt and lease obligations? A) Total debt to capitalization ratio. B) Funds from operations/total debt ratio. C) Free operating cash flow/total debt ratio. D) Earnings before interest and taxes (EBIT) interest coverage ratio.



A, everything else is sort of a form of CF, A is not

Thread closed! I retire (I chose D) - Ans is A

i would’ve messed up on this one.

good questions D… I guess its kinda intuitive even though you might not remember the actual list of formula that measure cash adequacy… the first one tells you levels of leverage based on the total books - but doesn’t really give you an idea of whether you have enough cash flows to service the same…