Sunday 25 December 2011

'Operating Cash Flow Ratio' is sometimes a better indication of liquidity.



Definition of 'Operating Cash Flow Ratio'

A measure of how well current liabilities are covered by the cash flow generated from a company's operations.

Formula:
Operating Cash Flow Ratio
Investopedia Says

Investopedia explains 'Operating Cash Flow Ratio'

The operating cash flow ratio can gauge a company's liquidity in the short term. Using cash flow as opposed to income is sometimes a better indication of liquidity simply because, as we know, cash is how bills are normally paid off.


Read more: http://www.investopedia.com/terms/o/ocfratio.asp#ixzz1hW4WvJ9t

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