A Very Low Cash Ratio Does Not Send a Strong

question 79

True/False

A very low cash ratio does not send a strong message to investors and creditors that the company has the ability to repay its short-term debt.

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, giving the holder a share in the company's profits and losses.

Market Price

The current purchase or sale price of an asset or service in the market.

Return on Equity

A measure of a corporation's profitability relative to stockholders’ equity, indicating how effectively management is using a company's assets to create profits.

Cash Coverage Ratio

This is a measure of a company's ability to cover its debt obligations with its available cash and cash equivalents.