Production Schedule Adherence

Measures a company's ability to meet its financial obligations using its operational cash flow.

What it Measures ?

Can we pay our debts with operating cash?

Relevant StakeHolders 

CFO, Treasury

Why it Matters ?

Tracks ability to meet debt obligations.

In-depth Use Case / Real-world Example

Cash Flow Adequacy Ratio is calculated by dividing operational cash flow by total debt obligations. For example, if a company’s operational cash flow is ₹500,000 and its debt obligations are ₹400,000, the ratio is 1.25, meaning the company generates more cash from operations than it needs to cover its debts. A higher ratio indicates strong liquidity and the ability to cover liabilities, while a lower ratio suggests potential liquidity risks and reliance on external funding sources.