Cash to Market Cap

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Definition

Cash to Market Capitalization measures liquidity and financial stability of a company. If the company has a high cash to market cap ratio (a ratio over 10%), the company is considered financially stable. However, a very high ratio could mean that the company is not investing a lot and could raise questions regarding why. This measurement is useful when comparing with competitors in the same industry.


Formula

Cash to Market Cap = Cash on Hand / Market Cap

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