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re: Excess Cash on Hand - Businesses
Posted on 3/11/15 at 2:18 pm to LSUFanHouston
Posted on 3/11/15 at 2:18 pm to LSUFanHouston
Sorry for the confusion. I obviously did not word the question well. How much cash does the average business keep relative to expenses. I guess it could be considered an emergency fund for a business. If a companies expenses are $100 a month and $200 is kept in cash they would have 2 months expenses in cash. What would would you think is a common ratio of cash/monthly expenses.
Posted on 3/11/15 at 2:21 pm to TheDirty1
They don't base it on expenses normally. It's a liquidity calculation. You normally want to see a current ratio of above 1.
There is also the quick ratio, but that's not as commonly used.
There is also the quick ratio, but that's not as commonly used.
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