Does John T Reed's formula for positive cash flow make sense?

[Scott Pigman]

A week or two ago there was a discussion regarding the 50% rule based on this "positive cash flow" article by John T Reed (actually Reed uses 45%, but that's neither here nor there for my question).

In the article Reed presents a formula for determining if a rental property will have positive cash flow or not, but I can't make sense of the reasoning behind the formula and Reed doesn't really explain it. I'm wondering if anyone here can explain the reasoning and comment on the formula's validity.

He says, 

so that's,

LTV * C < CapRate --> positive cash flow

(C = Annual constant)

He goes on to define the terms like so,

LTV = Loan/Value

C = (annual payments) / (loan balance)

Cap rate = NOI / Price

NOI (Net operating income) = income - expenses

If you do some algebra you can restate the formula as,

(loan/value) * (price / loan balance) * annual payments < NOI --> positive cash flow

Being somewhat simple minded I would have thought that the formula for positive cash flow would be simply,

annual payments < NOI --> positive cash flow

But I don't understand the multipliers on the left side,

(loan/value) * (price/balance)

Can anyone explain to me why they should be considered?

One final observation, if we assume a "no money down" deal, we can somewhat simplify the formula:

Loan = price - down payment

let down payment = 0

then, 

Loan = price

therefore,

(price^2/(value * balance) < NOI --> positive cash flow

but I don't know if that really helps or not.

Anybody got any ideas?