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.
Definition
CFADS, also commonly referred to as Cash Available for Debt Service (CADS), is a measure of the amount of cash a business has available to service debt obligations.
CFADS takes into account several cash inflows and outflows (including all current interest payments and principal repayments) to give an accurate representation of 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 suggests a lower risk of default, where a smaller number indicates a higher risk.
Functionality
The addition of CFADS ratio will not change the report structure of DataShare.
Rather it will be added to the bottom of the list of metrics within the Financial Reports within a section entitled “Cashflow availability”.
When exported to excel “Cashflow availability” is available at the bottom of the extract.
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