http://thecuriousinvestor.com/2007/06/14/fundamental-analysis-its-not-all-about-earnings/ A stock market and investing blog for the curious Tue, 08 Dec 2009 07:09:51 +0000 hourly 1 http://wordpress.org/?v=3.0 http://thecuriousinvestor.com/2007/06/14/fundamental-analysis-its-not-all-about-earnings/comment-page-1/#comment-4712 The Curious Investor » Blog Archive » Financial Analysis: Liquidity Ratios Fri, 06 Jul 2007 02:25:38 +0000 http://thecuriousinvestor.com/2007/06/14/fundamental-analysis-its-not-all-about-earnings/#comment-4712 [...] The final most conservative measure of a company’s liquidity is the cash flow ratio which is a look at whether or not a company has enough money from its current operations to pay off its current liabilities. It’s defined as operating cash flow divided by current liabilities. A cash flow ratio greater than 1 is usually a relatively good indicator of solid financial health as this implies that if the company would be viable so long as it focused on its core operations. Here we need to revisit the idea of free cash flow which we mentioned in “It’s Not All About Earnings. [...] [...] The final most conservative measure of a company’s liquidity is the cash flow ratio which is a look at whether or not a company has enough money from its current operations to pay off its current liabilities. It’s defined as operating cash flow divided by current liabilities. A cash flow ratio greater than 1 is usually a relatively good indicator of solid financial health as this implies that if the company would be viable so long as it focused on its core operations. Here we need to revisit the idea of free cash flow which we mentioned in “It’s Not All About Earnings. [...]

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