Both ratios indicate the time period required to free the company from its obligations using retained cash flows from operations to repay the debt.
The simple approach for evaluating the quality of income is a ratio comparing cash flows from operations to operating income.
Therefore, dividends paid are deducted from cash flows from operations.
Ultimately, all replacement and expansion expenditures must be financed by cash flows from earnings.
95 does require entities using the indirect method to report net cash flows from
operating activities at least to disclose the cash paid for interest and income taxes and to report separately changes in inventory, receivables and payables.
The ratings for Energy East also reflect the structural subordination of cash flows from
the operating utilities (NYSEG represents approximately 60% of consolidated EBITDA), as well as regulatory, cash flow and energy diversification benefits resulting from the mergers.