CAPEX Coverage Ratio
Calculate the capital expenditure coverage ratio, a solvency ratio that measures a company’s ability to cover its capital expenditures with its cash flow from operations.
The capex coverage ratio evaluates a company’s ability to fund its capital expenditures, which are essential for maintaining and growing its business, using the cash generated from its operations. A higher ratio indicates a stronger ability to fund capital investments from operating cash flow.
The formula is as follows:
\[\text{Capital Expenditure Coverage Ratio} = \text{Cash Flow from Operations} / \text{Capital Expenditure}\]Also known as: capital expenditure coverage.
CAPEX Coverage Ratio in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_capex_coverage_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["TSM", "INTC", "MU"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_capex_coverage_ratio()
Or, after setting up the Finance Toolkit MCP, ask:
How many times did the operating cash flow of TSMC, Intel and Micron cover their capital expenditure from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| INTC | 1.449 | 0.6161 | 0.4455 | 0.3461 | 0.6621 |
| MU | 1.2431 | 1.2581 | 0.2031 | 1.0144 | 1.1052 |
| TSM | 1.3093 | 1.4781 | 1.2999 | 1.9102 | 1.7738 |
Parameters
get_capex_coverage_ratio accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (income and cash flow statement items) over, with balance sheet items averaged over the same number of period ends. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses single-period flows (per quarter and not annualized with quarterly data). | 4 |