current cash debt coverage ratio

Definition

A cash-basis ratio that accounts for the changing liabilities and cash flows that a company experiences during the course of a time period. Current cash debt coverage ratio is a measure of liquidity. Unlike the acid-test ratio or current ratio, the current cash debt coverage ratio does not look at year-end balances. Instead, the ratio is calculated by taking the net cash provided by operating activities and dividing it by the average current liabilities.

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You should try to make sure that you have enough in your current cash debt coverage ratio at all times.

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The estimate finance gave us was for the current ratio, when what we needed was the current cash debt coverage ratio instead.

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Since the company was very liquid, their current cash debt coverage ratio was excellent. They knew they had money on hand, and the ratio confirmed that.

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