Cash flow adequacy ratio (CFAR) defined as-
This ratio is often used to determine cash richness of company reflecting true picture of the company.
This tells is whether the cash generated by the company from its operations is sufficient to fund its future capital needs that are required either for the replacement of fixed assets or for expansion or for growth in the operations or even further diversification.
Answered by
Nagendra
at
5:48 AM on September 02, 2008