Cash assets to total assets ratio
factor.formula
Cash assets ratio:
This formula calculates the proportion of cash and cash equivalents to total assets.
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Refers to the total amount of cash and cash equivalents in the last 12 months (Trailing Twelve Months). Cash and cash equivalents include cash on hand, bank deposits and other short-term investments that can be quickly converted into cash, and are the most liquid assets of an enterprise.
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Refers to the total assets of an enterprise at the beginning of the reporting period, including current assets, non-current assets, etc.
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Refers to the total assets of an enterprise at the end of the reporting period, including current assets, non-current assets, etc.
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Refers to the average value of a company's total assets during the reporting period, which is used to smooth the impact of asset changes and provide a more representative level of total assets. Using the average of total assets at the beginning and end of the period rather than total assets at a single point in time can reduce calculation bias caused by short-term asset fluctuations.
factor.explanation
This factor describes the liquidity level and financial soundness of a company. Generally speaking, companies with a higher cash asset ratio have stronger short-term debt repayment ability and stronger ability to resist external shocks, but it may also mean that the company holds too much idle funds and lacks investment opportunities or investment intentions. Companies with a lower cash asset ratio may be more dependent on external financing or operating cash flow, and the risk is relatively high. High-risk companies tend to hold more precautionary cash reserves. Therefore, in riskier stocks, this factor is usually positively correlated with expected returns, which is consistent with the market consensus-high risk, high return. This factor can be applied to quantitative strategies such as stock selection, risk management, and portfolio construction to assess the financial health and potential returns of companies.