Definition
CFADS, also known as Cash Available for Debt Service (CADS), measures the amount of cash a business has available to service debt obligations.
CFADS accounts for several cash inflows and outflows (including all current interest payments and principal repayments) to accurately represent the ability to generate cash flows and to service debt within one calendar year.
CFADS Calculation
|
Measure |
Calculation Details |
Factor |
| EBITDA | Net Profit | |
| Interest charges | add | |
| Tax Charges | add | |
| Depreciation Charges | add | |
| Amortisation Charges | add | |
| Change in working capital | Change in inventories | add |
| Change in trade and other receivables | add | |
| Change in trade and other payables | add | |
| Taxation | Taxation paid | deduct |
| Capex | Payments to acquire non-current Assets | deduct |
| Increase in Capital | Additions to capital | add |
| Dividends paid | Dividends paid | deduct |
| CFADS | Result |
Interpreting CFADS
CFADS is listed as a monetary value. CFADS measures the amount of cash a company has on hand relative to its debt service obligations due within one calendar year, so a larger number indicates a lower risk of default, whereas a smaller number indicates a higher risk.
Functionality
Assessing risk is critical so the Cash Flow Available for Debt Servicing (CFADS) metric is now listed in the Financial Snapshot for all clients to benefit from.
The addition of the CFADS ratio will not change the report structure of Validis.
The CFADS ratio can be found at the bottom of the metrics within the Financial Reports section entitled Cash Flow Availability.
When exported to Excel the Cash Flow Availability is available at the bottom of the extract.