cash to sales ratio definition

cash to sales ratio

Comparison of cash balance at the end of a period (usually expressed in number of weeks or months) to the sales revenue in that period. It indicates the effectiveness of the firm's credit and collection policies, and the amount of cash required as buffer for unexpected delays in cash collection. It is the inverse of cash turnover ratio. Formula: Average cash balance (at the end of a period) ÷ Sales revenue (in that period).

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