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Cecilia Chua asked 5 years ago

Hi
I am looking at the debt/cash flow ratio and cash ratio, and I am wondering what is the difference between “free cash flow” and “cash and cash equivalents”?
Thank you.

1 Answers
Victor Chng answered 5 years ago

Hi Cecilia,
 
When you calculate the debt to cash flow formula. Use the net operating cash flow from operating activities instead of Free cash flow.
 
Free cash flow is the cash inflow from the operating business after deducting the capital expenditure while cash and cash equivalent are cash that are in the bank.