Minimum Liquidity Ratio Definition | Law Insider (2024)

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Minimum Liquidity Ratio Definition | Law Insider? ›

Minimum Liquidity Ratio means, unrestricted cash and Cash Equivalents plus Unused Availability plus net accounts receivable divided by Senior Debt outstanding.” Sample 1Sample 2.

Minimum Liquidity means the sum of Revolving Loan Availability plus unrestricted cash and cash equivalents that are (a) owned by any Borrower, (b) not subject to any Lien other than a Lien in favor of Agent, (c) held in a Deposit Account or Securities Account that is subject to a Deposit Account Control Agreement or ...

Minimum Ratio means, as of any Settlement Report Date and continuing until (but not including) the next Settlement Report Date, an amount (expressed as a percentage) which is calculated as follows: MR = a + (b * c) Where: MR = Minimum Ratio; Minimum Ratio means 15%.

The liquidity coverage ratio (LCR) refers to the proportion of highly liquid assets that financial institutions must hold to ensure that they can meet their short-term obligations and ride out any disruptions in the market. It is mandated by international banking agreements known as the Basel Accords.

A current ratio below 1 means that the company doesn't have enough liquid assets to cover its short-term liabilities. A ratio of 1:1 indicates that current assets are equal to current liabilities and that the business is just able to cover all of its short-term obligations.

Minimum Liquidity Ratio means, as of any measurement date, the ratio of (a) Available Liquidity on such measurement date to (b) the sum of unsecured bond maturities and other scheduled payments in respect of Indebtedness for borrowed money of the Consolidated Group (other than intercompany Indebtedness among Holdings ...

Minimum liquidity holdings ADIs

57. An MLH ADI must maintain a minimum holding of nine per cent of its liabilities in specified liquid assets, in accordance with Attachment B.

Liquidity ratios are what creditors (and sometimes debtors) use to work out if a company can repay creditors from the total cash they have available. The higher the liquidity ratio is for that company, the more liquid their assets are and the more able they'll be to pay off short-term debts.

A ratio of 1 means that a company can exactly pay off all its current liabilities with its current assets. A ratio of less than 1 (e.g., 0.75) would imply that a company is not able to satisfy its current liabilities. A ratio greater than 1 (e.g., 2.0) would imply that a company is able to satisfy its current bills.

Current Ratio or Working Capital Ratio. Quick Ratio also known as Acid Test Ratio. Cash Ratio also known Cash Asset Ratio or Absolute Liquidity Ratio. Net Working Capital Ratio.

What does a liquidity ratio of 0.5 mean? ›

A low liquidity ratio, such as 0.5, indicates that a company does not have enough current assets to cover their current liabilities. If these current liabilities needed to be paid sooner than expected, the company would not be able to afford.

A stock's liquidity generally refers to how rapidly shares of a stock can be bought or sold without substantially impacting the stock price. Stocks with low liquidity may be difficult to sell and may cause you to take a bigger loss if you cannot sell the shares when you want to.

A liquidity ratio is important because it states how much cash a bank to meet the request of its depositors. Therefore, a bank with a liquidity ratio of less than 30% is not a good sign and may be in bad financial health. Above 30% is a good sign.

Definition: Liquidity means how quickly you can get your hands on your cash. In simpler terms, liquidity is to get your money whenever you need it. Description: Liquidity might be your emergency savings account or the cash lying with you that you can access in case of any unforeseen happening or any financial setback.

The least liquid assets typically take the longest time to sell. Houses, land and other real estate fall into this category of assets. You can turn these investments into cash, but the process can take months or years and usually involves a number of other costs such as realtor commissions and closing costs.

If a company has poor liquidity levels, it can indicate that the company will have trouble growing due to lack of short-term funds and that it may not generate enough profits to its current obligations.

Creditors and investors like to see higher liquidity ratios, such as 2 or 3. The higher the ratio is, the more likely a company is able to pay its short-term bills. A ratio of less than 1 means the company faces a negative working capital and can be experiencing a liquidity crisis.