Cash + Securities + (Receivables – Bad Debts) / Daily Operating Expenses (forecast)
The period (in days) during which the cash and readily liquid assets of the business can cover its operating expenses.
- Evaluation of business liquidity in combination with other liquidity indicators
- It is evaluated depending on the type of business and its mode of operation.
- It is greatly influenced by seasonality
Business actions to improve the Index
- Increase healthy Sales
- Reduce Bad Debts
- Reduce Total Expenses
