Cash Flow Liquidity Ratio Calculator

Formula

The formula to calculate the Cash Flow Liquidity Ratio (CFLR) is:

\[ CFLR = \frac{C + CE + MS + CFO}{CL} \]

Where:

\(CFLR\) is the cash flow liquidity ratio
\(C\) is the cash
\(CE\) is the cash equivalents
\(MS\) is the marketable securities
\(CFO\) is the cash flow from operations
\(CL\) is the current liabilities

Cash Flow Liquidity Ratio Definition

The cash flow liquidity ratio is a financial metric that measures a company’s ability to cover its short-term liabilities with its cash flow from operations, cash, cash equivalents, and marketable securities. This ratio is an important indicator of a company’s short-term financial health and its ability to meet its obligations without needing to secure additional financing. A higher cash flow liquidity ratio indicates a stronger liquidity position, suggesting that the company is well-positioned to handle its short-term liabilities.

Example Calculation

Let's assume the following values:

Cash (C) = 5000
Cash Equivalents (CE) = 2000
Marketable Securities (MS) = 3000
Cash Flow from Operations (CFO) = 10000
Current Liabilities (CL) = 15000

Using the formula to calculate the Cash Flow Liquidity Ratio (CFLR):

\[ CFLR = \frac{5000 + 2000 + 3000 + 10000}{15000} = 1.4667 \]

The Cash Flow Liquidity Ratio (CFLR) is approximately 1.4667.