Depreciation to Cash Flow

Quick Definition

An efficiency measurement gauging the impact of depreciation and amortization on cash flow.

Depreciation to Cash Flow Formula

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.

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