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Finance / July 12, 2018 / Alicia Franklin

FCF measures the level of cash available to a company's investors net of all required investments in working capital and fixed capital, including plant, property and equipment, otherwise known as capital expenditures, plus any expenses required to remain a going concern. FCF is an important measure because it allows a company to pursue opportunities that enhance shareholder value. Excess cash can expand production, develop new products, make acquisitions, pay dividends and reduce debt.

Debt to total asset ratio is the ratio indicating the percentage of total assets of the company financed from debt. It is a broad financial parameter used to measures what part of assets are served by liabilities (debt) signifying financial risk. It is one of the solvency ratios and helps in measuring how far the company is capable of meeting its long-term financial obligations.

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