Ability of cash flows from operations to cover current debt and dividends = ________.
A)sustainable cash flow from operations/ (current portion of financing debt + dividends)
B)(sustainable cash flow from operations/ current portion of financing debt) - dividends
C)(current portion of financing debt + dividends)/ sustainable cash flow from operations
D)current portion of financing debt + (dividends/ sustainable cash flow from operations)

Question

Quizplus · Accepted Answer

The correct formula for assessing the ability of cash flows from operations to cover current debt and dividends is sustainable cash flow from operations divided by the sum of the current portion of financing debt and dividends. This ratio indicates how well the company's operational cash flows can meet its short-term obligations and dividend payments.

Ability of Cash Flows from Operations to Cover Current Debt