The cash ratio is a measure of liquidity that measures a company’s ability to pay off its short-term liabilities using only cash and cash equivalents.
The cash ratio is obtained by adding up a company’s total cash and near-cash reserves and dividing that amount by its total current liabilities.
The cash ratio is more conservative than other liquidity ratios as it takes into account only the company’s most liquid resources.
A score greater than 1 means the company has more cash than current debt, and a score less than 1 means the company has more short-term debt than cash.
Lenders, lenders and investors use the cash ratio to evaluate a company’s short-term risk.
Accounting ratios, an important subset of financial ratios, are a group of metrics used to measure a company’s performance and profitability based on its financial statements.
The acid test, or quick ratio, compares a company’s shortest-term assets to its shortest-term liabilities to see if the company has enough cash to pay off its immediate liabilities, such as short-term debt.
Activity Ratio broadly describes any type of financial measure that helps investors and analysts evaluate how effectively a company is using its assets to generate revenue and cash.
Performance Based Management (ABM) is a means of analyzing a company’s profitability by looking at every aspect of its business to determine its strengths and weaknesses.
Benefit Cost Ratio (BCR) is a measure showing the relationship between the relative costs and benefits of a proposed project, expressed in monetary or qualitative terms.
The CAPE ratio is used to analyze the long-term financial performance of a public company, taking into account the impact of various economic cycles on the company’s profit.
Capital expenditures are payments for goods or services that are recognized or capitalized on a company’s balance sheet, rather than expensed on the income statement.