Cash Flow Coverage Ratio
Calculate the cash flow coverage ratio, a solvency ratio that measures a company’s ability to pay off its debt with its operating cash flow.
The cash flow coverage ratio assesses a company’s ability to meet its debt obligations by comparing its operating cash flow to its total debt. A higher ratio indicates a stronger ability to cover its debt with cash generated from operations.
The formula is as follows:
\[\text{Cash Flow Coverage Ratio} = \text{Cash Flow from Operations} / \text{Total Debt}\]Cash Flow Coverage Ratio in Python
get_cash_flow_coverage_ratio is part of the Ratios module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_cash_flow_coverage_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
cash_flow_coverage_ratios = toolkit.ratios.get_cash_flow_coverage_ratio()
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| AAPL | 0.7621 | 0.922 | 0.892 | 0.9932 | 0.992 |
| TSLA | 1.2957 | 2.5616 | 1.3847 | 1.0954 | 1.7606 |
Parameters
get_cash_flow_coverage_ratio accepts the following parameters:
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.