1. What is Cash Flow to Creditors?

Cash Flow to Creditors (CFC) represents the net cash flow between a company and its creditors. It is calculated as interest paid minus net new borrowing, showing how much cash is flowing to or from the company's creditors.

2. How Does the Calculator Work?

The calculator uses the CFC formula:

Where:

• \( Interest \) — Total interest paid to creditors ($)
• \( Net\ New\ Borrowing \) — New borrowing minus debt repayments ($)

Explanation: A positive CFC indicates net cash outflow to creditors, while a negative value suggests net cash inflow from creditors.

3. Importance of CFC Calculation

Details: CFC is crucial for understanding a company's debt management, financial health, and cash flow patterns with creditors. It helps investors and analysts assess how effectively a company is managing its debt obligations.

4. Using the Calculator

Tips: Enter interest paid in dollars and net new borrowing in dollars. Positive net new borrowing indicates new borrowing exceeded repayments, while negative indicates more repayments than new borrowing.

5. Frequently Asked Questions (FAQ)

Q1: What does a positive CFC value mean?
A: A positive CFC indicates that the company paid more in interest than it received in new borrowing, representing a net cash outflow to creditors.

Q2: What does a negative CFC value indicate?
A: A negative CFC suggests that the company received more in new borrowing than it paid in interest, representing a net cash inflow from creditors.

Q3: How is net new borrowing calculated?
A: Net new borrowing is calculated as new debt issued minus debt repayments during the period.

Q4: Why is CFC important for financial analysis?
A: CFC helps analysts understand a company's debt management strategy, liquidity position, and how the company is financing its operations through debt.

Q5: How often should CFC be calculated?
A: CFC should be calculated for each financial period (quarterly or annually) to track changes in the company's relationship with its creditors over time.