Which ratio gauges a company’s ability to repay its debts using funds generated from operating...

The cash flow-to-total debt ratio assesses a company ' s ability to repay its debts using cash generated from its operating activities. It is calculated by dividing operating cash flow by total debt. A higher ratio indicates better capacity to cover debts. This metric is crucial for evaluating financial health and understanding a firm ' s liquidity position. Other ratios listed have different focuses:

Interest coverage (B) measures a company’s ability to pay interest with operating income.

Asset coverage (C) measures the protection provided to creditors.

Debt-to-equity (D) evaluates capital structure but not immediate debt repayment ability.

References

CSC Volume 2 , Chapter 14: Company Analysis - Risk Analysis Ratios , p. 14-12 to 14-16​.