Lesson 4 of 5 · All lessons in this module
  1. Evaluating sources and uses of cash
  2. Common-size cash flow statements
  3. Free cash flow to the firm and to equityVideo lesson
  4. Cash flow performance ratiosVideo lesson
  5. Cash flow coverage ratios

Lesson 4 of 5 · 12 min

Cash flow performance ratios

Performance ratios put CFO over revenue, assets, equity, operating income or shares to show how much operating cash a company squeezes out of each unit of sales or investment.

In short

  • Cash flow ratios fall into performance (profitability) ratios and coverage (solvency) ratios.
  • Cash flow to revenue = CFO ÷ net revenue: operating cash per unit of revenue.
  • Cash return on assets = CFO ÷ average total assets; cash return on equity = CFO ÷ average shareholders' equity.
  • Cash to income = CFO ÷ operating income: the cash-generating ability of operations.
  • Cash flow per share = (CFO − preferred dividends) ÷ common shares outstanding. Under IFRS, add back total dividends paid if they sit in operating, then subtract preferred dividends.

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