Quick Definition
An efficiency measurement gauging the impact of depreciation and amortization on cash flow.
Depreciation to Cash Flow Formula
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Depreciation to Cash Flow
Explanation of Depreciation to Cash Flow
The Depreciation to Cash Flow ratio measures how well a company can sustain its level of cash flow and avoid market fluctuations.
Importance of Depreciation to Cash Flow
A high, or increasing Depreciation to Cash Flow ratio indicates the company's cash flow is more predictable and is not having to ride the highs and lows of market conditions.
A company can be said to have a more efficient operation if the impact of Depreciation and Amortization are low or decreasing.
