Cash flow from operations to current liabilities
Cash flow from operations to current liabilities
= Net cash flow from operating activities x 100
Average current liabilities
Where：
Net cash flow from operating activities is taken directly from the cash flow statement published to comply with FRS 1. Average current liabilities are computed from the opening and closing balance sheet.
This ratio examines the liquidity of the company by providing a measure of the extent to which current liabilities are covered by cash flowing into the business from normal operating activities. The ratio is thought to possess some advantage over balance sheet-based ratios such as the liquidity ratio as a measure of short-term solvency. This is because balance sheet ratios are based on a static positional statement (the ?instantaneous financial photograph?) and are therefore subject to manipulation by， for example， running down stock immediately prior to the year end and not replacing it until the next accounting period. Balance sheet based ratios may alternatively be affected by unusual events which cause particular items to be abnormally large or small. In either case， the resulting ratios will not reflect normal conditions.
Cash recovery rate
Cash recovery rate (CRR)=
Cash flow from operations x 100
Average gross assets
Where：
Cash flow from operations is made up of ?net cash flow from operating activities? together with any proceeds from the disposal of long-term assets. Gross assets is the average gross value of the entity?s assets.
Assets are required to generate a return which is ultimately， if not immediately， in the form of cash. The CRR is， therefore， a measure of the rate at which the company recovers its investment in fixed assets. The quicker the recovery period， the lower the risk. You may have noticed that the CRR is thus the reciprocal of the pay back period used for capital project appraisal purposes assuming projects have equal (or roughly equal) annual cash flows.
Cash flow per share
Cash flow per share =
Cash flow
Weighted average no. of shares
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