Which financial ratio indicates the number of days of cash on hand,at present sales levels?
A) days of inventory
B) fixed asset turnover
C) days of cash
D) average collection period
E) inventory turnover

Question

Quizplus · Accepted Answer

Days of cash measures how many days worth of expenses a company can cover with their current cash balance. This ratio is useful in assessing a company's liquidity and ability to meet short-term obligations. It is calculated by dividing the cash balance by the average daily cash expenditures. It is particularly important for companies with volatile cash flows or those operating in industries with long payment cycles.

Which Financial Ratio Indicates the Number of Days of Cash