In business, liquidity is defined as the period of time it takes to turn assets into cash. It takes 20 minutes to turn the balance in the checking account into cash. You head on down to the bank and present a check. You get cash.  This same time principle is used for all the other asset groups on the balance sheet.   To assist business entrepreneurs, liquidity ratios are used to evaluate this ability to turn current assets into cash.

Cash Ratio

Cash Ratio

One of the liquidity ratios used in business is the cash ratio.  It is a much more effective tool for small business than the traditional current or quick ratio.  Although the cash ratio is more difficult to manipulate in small business, most entrepreneurs miscalculate the result

Small Business Model Series Entry #4 – Basic Research

I spent a lot of time on the internet researching the industry as a whole.  There are about 220,000 machines in the US that are owned by non-banking companies and individuals.  So my first thought is that this is about 1 machine per 1,000 individuals (there’s about 220 million adults in the US/220 thousand machines and you get 1,000 adults per machine).

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