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Glossary · Business quality

Financial health

Whether the balance sheet can survive a bad year: debt, cash and the cash flow to pay debts.

Why it matters

Too much debt turns a slowdown into a crisis. Strong balance sheets let companies keep investing when rivals cut back.

How to read it

More cash than debt is excellent. Debt that free cash flow could repay in under three years is comfortable.

Related

Debt and cashWhat the company owes lenders, against the cash it holds.Free cash flowCash from operations minus what the company spends on equipment and buildings.

In the Cluenex app, this explanation opens next to every financial health figure, with the live reading for the stock you are looking at. Open it in Cluenex