Glossary: M05 Cash Flows II
| Term | Definition |
|---|
| Free Cash Flow to Firm (FCFF) | Cash available to all capital providers (debt and equity) after operating expenses and capital investments |
| Free Cash Flow to Equity (FCFE) | Cash available to equity holders after all expenses, reinvestment, and debt payments |
| Cash Flow-to-Revenue | CFO divided by net revenue; measures cash generation per dollar of revenue |
| Cash Return on Assets | CFO divided by average total assets |
| Cash Return on Equity | CFO divided by average shareholders’ equity |
| Cash-to-Income Ratio | CFO divided by operating income; measures cash quality of earnings |
| Debt Coverage Ratio | CFO divided by total debt |
| Interest Coverage (Cash Basis) | (CFO + Interest + Taxes) divided by interest paid |
| Reinvestment Ratio | CFO divided by cash paid for long-term assets |
| Debt Payment Ratio | CFO divided by cash long-term debt repayment |
| Dividend Payment Ratio (Cash) | CFO divided by dividends paid |
| Investing and Financing Ratio | CFO divided by cash outflows for investing and financing |
| Common-Size Cash Flow | Each CF line item expressed as percentage of total cash inflows or revenue |
| Operating Cash Flow Quality | Comparison of CFO to net income to assess earnings sustainability |
| Cash Burn Rate | Rate at which a company consumes cash; relevant for startups and loss-making firms |