For example, a highly capital-intensive industry, such as utilities, may have a lower ICR than a less capital-intensive industry, such as retail, due to the higher cost of debt service. Therefore, it's important to use the industry average ICR as a benchmark. In addition, the size of ...
One limitation of the LLCR is that it does not pick up weak periods because it basically represents a discounted average that can smooth out rough patches. For this reason, if a project has a steady cash flows with a history of loan repayment, a good rule of thumb is that the LLCR shou...
Therefore, when evaluating a company's financial health, it is important to use the debt ratio in conjunction with other debt evaluation ratios such as the TIE ratio and the DSCR ratio. The debt-to-asset ratio, for instance, is another useful metric that calculates the percentage of a compan...
Average Price / Cash Flow 6.74x source: ycharts Average Price to a Cashflow ratio of these top Utility companies is around 6.74xLimitations There is only one limitation to this ratio. It also has one loophole, and that is this – it doesn't take capital expenditure into account. If you...
Talking of its benefits, this ratio gives an accurate view of a company’s overall growth. Moreover, it also shows the actual cash flows that a firm generates from its operations. One can also use this ratio to compare it with the industry average and rivals. This would give a better id...
Formula for Payable Deferral Period Following is the formula to calculate DPO: = (Average Accounts Payable / Cost of Goods Sold) x Number of Days in the Accounting Period Average Accounts Payable = (Opening Accounts Payable Balance plus Closing Accounts Payable Balance)/2 ...
1 BUSN3004 Corporate Finance – Formulae Sheet ()()()()()c c e i o o e i t D r t D r debt of benefits shiel d tax of lu e Present va Equity Debt Equity k Equity Debt Debt k k company the o f ue market val Total income operatin g Net E D O V O k...
The standard range for a breakeven occupancy ratio among commercial properties tends to be somewhere between 60% and 80%. In contrast, breakeven occupancy ratios are usually on the lower end for hospitality properties, namely hotels, which average between 50% to 60%, which functions as a necessa...
For example, a highly capital-intensive industry, such as utilities, may have a lower ICR than a less capital-intensive industry, such as retail, due to the higher cost of debt service. Therefore, it's important to use the industry average ICR as a benchmark. In addition, the size of ...