Beaver Ratio

The Beaver Ratio is a financial metric used to assess a company's ability to generate cash from its core operations. It compares the cash flow from operating activities to the company's net income, indicating how much of the profit is backed by actual cash. A higher Beaver Ratio suggests stronger cash generation relative to reported earnings, which can be a sign of financial health. Conversely, a low ratio might signal that profits are not supported by cash, raising concerns about potential liquidity issues or earnings quality. It's useful for investors evaluating a company's operational efficiency and financial stability.