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QuestionsCategory: Investor PsychologyHow to judge whether a company has a healthy amount of cash?
Ariq Tan asked 5 months ago

Hi, 
It was mentioned in the course materials ” Think like a business owner” that we need to look out for companies with a healthy amount of cash in the bank and too much cash is not good as well but how do we judge whether the amount of cash held is healthy?
 
Cheers, 
Ariq Tan
 
 

1 Answers
Victor Chng answered 5 months ago

Hi Ariq,
 
There is no fixed % of what is a good amount of cash. Generally, if the business have more cash than debt, it is good. 
 
It does not mean having more debt than cash is bad. As long as the debt is manageable and the company is recurring, it is ok to have more debt than cash.