43
Cash Flows Ratio
Cash Equivalents +Marketable Securities
Current Liabilities
Table 2.17: Calculation of Cash Flow Ratio
From: Financial Reporting and Analysis: Using Financial Accounting Information
2007
b)
Operating Cash Flow Ratio
According to Palepu et al (2004, p.5-17), operating cash flow ratio is used
as a measurement to analyze of how company is using the cash flow from
company’s
operation
to
repay
for
its
current
liabilities.
The
operating
cash flows can be calculated as follows:
Operating Cash Flows
Cash Flows from operating activities
Current Liabilities
Table 2.18: Calculation of Operating Cash Flows
From: Business Anlaysis & Valuation: Using Financial Statements, 2004
c)
Funds Flow Coverage Ratio
According
to
Mills
and
Yamamura
(1998,
p.57),
funds
flow
coverage
ratio
is used to assist
financial
users to evaluate the company’s ability
in
generating cash which can be used to fulfill its obligations such as paying
of
interests, short-term debts, taxes and preferred dividends. On the other
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