Do you know that there is an old saying in business that cash is king? Yes! For any small business, cash drives its income as it provides the business with the means to remain solvent for operating.

Business solvency occurs when there is enough investment in assets for covering its debt or liabilities by the company. Solvency ratios help us in measuring the extent to which a business can cover its liabilities during more than one year on in the year. These ratios help us in accurately measuring a firm’s liquidity and solvency compared to the ratios derived from either the income statement or balance sheet.

We should know how to develop and apply the information that we obtained from these ratios. So, in today’s podcast, we will discuss 5 ratios for cash flow analysis.