Quick Definition
Determines how successful a company can manage its short term debt.
Cash Flow Liquidity Ratio Formula
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Cash Flow Liquidity Ratio
Explanation of Cash Flow Liquidity Ratio
The Cash Flow Liquidity Ratio compares
Cash and Cash Equivalents,
Marketable Securities, and
Cash Flow from Operations to the
Total Current Liabilities of the company. This ratio measures how well a company can handle its
Short Term Debt with its cash and other liquid assets
Importance of Cash Flow Liquidity Ratio
Many different things can affect this ratio both positively and negatively, as
Total Current Liabilities make up several liabilities of the company. A steadily increasing Cash Flow Liquidity Ratio is desired.
