# How To Calculate Cash Flow Coverage Ratio in FinancialForce | Arithmix

Learn how to calculate the cash flow coverage ratio in FinancialForce with our step-by-step guide. Improve your financial analysis skills and make informed decisions for your business.

Calculating the cash flow coverage ratio is an important step in understanding the financial health of your business. This ratio measures the ability of your company to pay off its debts using its operating cash flow. In this article, we will explore what the cash flow coverage ratio is, when it is valuable to calculate it, and how to calculate it using FinancialForce.

## What Is Cash Flow Coverage Ratio?

The cash flow coverage ratio is a financial metric that measures the ability of a company to pay off its debts using its operating cash flow. This ratio is important because it helps investors and lenders understand the financial health of a business. A high cash flow coverage ratio indicates that a company has enough cash flow to cover its debt obligations, while a low ratio indicates that a company may struggle to pay off its debts.

To calculate the cash flow coverage ratio, you need to divide the company's operating cash flow by its total debt. Operating cash flow is the cash generated by a company's operations, while total debt includes both short-term and long-term debt.

## When Is It Valuable To Calculate Cash Flow Coverage Ratio?

It is valuable to calculate the cash flow coverage ratio when you want to understand the financial health of your business. This ratio can help you determine whether your company has enough cash flow to cover its debt obligations. It is also useful when you are seeking financing from investors or lenders. A high cash flow coverage ratio can make your business more attractive to investors and lenders, while a low ratio may make it more difficult to secure financing.

Additionally, calculating the cash flow coverage ratio can help you identify areas where you can improve your business's financial health. For example, if your ratio is low, you may need to focus on increasing your operating cash flow or reducing your debt.

## How to Calculate Cash Flow Coverage Ratio Using FinancialForce

Calculating the cash flow coverage ratio using FinancialForce is a straightforward process. First, you need to gather the necessary financial information, including the company's operating cash flow and total debt. This information can be found in FinancialForce's financial statements.

Once you have this information, you can calculate the cash flow coverage ratio by dividing the company's operating cash flow by its total debt. For example, if a company has an operating cash flow of \$500,000 and total debt of \$1,000,000, the cash flow coverage ratio would be 0.5.

It is important to note that the cash flow coverage ratio is just one metric that should be considered when evaluating a company's financial health. It should be used in conjunction with other financial ratios and metrics to get a complete picture of a company's financial health.

In conclusion, the cash flow coverage ratio is an important metric that measures a company's ability to pay off its debts using its operating cash flow. It is valuable to calculate this ratio when you want to understand the financial health of your business or when seeking financing from investors or lenders. Calculating the cash flow coverage ratio using FinancialForce is a straightforward process that can help you identify areas where you can improve your business's financial health.

## How Do You Calculate Cash Flow Coverage Ratio in FinancialForce

FinancialForce itself isn’t naturally geared towards letting you calculate complex metrics like Cash Flow Coverage Ratio. As an alternative, teams typically use products like Arithmix to import data from FinancialForce and build out dashboards.

## What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like FinancialForce, combine it with data from other systems, and create calculations like Cash Flow Coverage Ratio.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

## Calculating Cash Flow Coverage Ratio in Arithmix

Calculating metrics like Cash Flow Coverage Ratio is simple in Arithmix. Once you've created your free account, you’ll be able to import your FinancialForce data, and use it to create natural language formulas for metrics like Cash Flow Coverage Ratio.

Arithmix is designed to give you the power to build any calculations you want on top of your FinancialForce data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.