Sales coverage

This indicator measures in percentage terms the degree of financial coverage of the turnover. 

The value is given by "total liquidity divided turnover" to indicate the percentage by which operating revenues (invoiced) of the management of the company are transformed into immediate liquidity.

🔹 1. Cash and Cash Equivalents / Revenues

🧠Formula:

 🧠 IMMEDIATE LIQUIDITY ➗ REVENUES

Coverage Ratio=us-gaap:CashAndCashEquivalentsAtCarryingValue / us-gaap:Revenues

🎯 Purpose:

This version is used to measure the company’s liquidity buffer in relation to its revenue base. It answers:

"How much of the company annual revenue is backed by cash on hands?"

📘  Interpretation:

A higher ratio suggests stronger short-term liquidity support (even before revenue collection).

Useful in crisis analysis, startup burn analysis, or stress testing.

Also relevant for high-volatility or seasonal businesses.

🔧 Use Case Example:

A company with $100M in revenue and $50M in cash → 0.5× coverage → 6 months of revenue in cash.