# Cash ratio (quota of available cash)

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- Post ID: 593504
- Modified: 2023-07-25T21:01:08+00:00
- Language: en

## Definition

Unless otherwise defined, the ratio of a company's cash and cash equivalents to its assets, sometimes also based on total assets. - This ratio is strikingly high for microenterprises (mircoenterprises: understood here as companies with up to new employees), but low for large companies. This has led to the conclusion, which is widely accepted in business management textbooks, that microenterprises lack the ability to manage their cash and cash equivalents in a planned manner. However, this must be countered by the fact that flexibility (flexibility: here understood as rapid adaptation to changing circumstances in the technical and economic sphere of the enterprise) is very high in microenterprises, and this of itself brings with it an increased need for cash, - investing in securities also entails costs for information, procurement, administration, monitoring, accounting, which are largely independent of the amount invested, and usually exceed the given time resources of a microenterprise, - for quite a few investments a minimum amount applies at the time of purchase; this amount often exceeds the threshold at which a small business might engage, and finally - many of the microbusinesses that are included in the statistics are one-man businesses; any investments in securities are then allocated to the entrepreneur's personal assets rather than to the business assets. - See cash laughs, cash management, financial planning, liquidity, optimal. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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