1. Guarantee degree of cash income in the current net profit of the enterprise: the guarantee multiple of the remaining cash can truly reflect the earnings quality of the enterprise. It evaluates the quality of enterprise income from the dynamic perspective of cash inflow and outflow, and corrects the actual profitability of enterprises. The higher the cash guarantee multiple of the surplus, the better the cash flow of the enterprise and the more secure the cash income in the net profit.
2. Assess the solvency: The guaranteed multiple of the remaining cash can provide a clear indicator for assessing the ability of an individual or enterprise to repay debts after making profits. A higher cash guarantee multiple of surplus means that enterprises have stronger solvency, thus reducing financial risks. By calculating this index, individuals or enterprises can find out whether they have enough cash flow to repay their debts in time, thus avoiding liquidity problems.
3. Judging the investment value: The guaranteed multiple of the remaining cash can also be used as a tool for investors to evaluate the investment value of enterprises. By analyzing the cash guarantee multiple of the surplus, investors can judge their financial health and sustainability, so as to make more informed investment decisions.