Short Term Coverage Ratio
Calculate the short-term coverage ratio, a liquidity ratio that measures a company’s ability to pay off its short-term obligations with its operating cash flow.
The short-term coverage ratio is calculated by dividing operating cash flow by short-term debt. It assesses the company’s ability to meet its short-term obligations using its operating cash flow.
The formula is as follows:
\[\text{Short Term Coverage Ratio} = \text{Cash Flow from Operations} / \text{Short Term Debt}\]Also known as: short-term debt coverage.
Short Term Coverage Ratio in Python
get_short_term_coverage_ratio is part of the Ratios module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_short_term_coverage_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
toolkit.ratios.get_short_term_coverage_ratio()
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| AAPL | -4.7495 | -3.9423 | -4.1291 | -4.1839 | -4.5755 |
| TSLA | -4.882 | 27.4701 | 4.9042 | 3.7675 | 4.0998 |
Parameters
get_short_term_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.