Hi, Debt to CashFlow ratio seemed a better ratio to measure available liquidity of company to pay off debts based on net cashflow activities.
In what situation will we be using Debt to Net Profit ratio, and how is it used/measured? Thanks
In most case, we will used debt to cash flow but sometime the company cash flow may be lower because they may to spend some money on their working capital such as inventory, receivables or payables. In such cases, the debt to cash flow cannot show the full picture, hence it is better to use debt to net profit.
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