BA 3340 Lecture Notes - Lecture 99: Orma 60, Electronic Signatures In Global And National Commerce Act, Earnings Before Interest And Taxes
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Some analysts prefer to replace ebit with cash 7ow from opera8ons: The higher the ra8o, the lower the long-term liquidity risk (according to lecture slides it is preferable that it"s above 2) 7. 3. 3 cash )ow from operations to debt ratio. Measures the extent to which current cash 7ow from opera8ons are suicient to repay liabili8es. A high ra8o signals a low long-term liquidity risk, as the company has suicient cash to repay its liabili8es. The ra8o shows the propor8on of capital expenditure a company is able to fund through its opera8ons. A ra8o greater than 1 indicates that cash 7ows from opera8ons are suicient to support capital expenditures. Show to what extent a company is able to mnance reinvestments from internally generated funds. A ra8o below 1 indicates that the company does not have a sustainable business model. 7. 4 overall assessment of the short and long term liquidity risk. How to merge the two types of liquidity risk:
