Cash Reinvestment Ratio

Cash Reinvestment Ratio

Formula to calculate cash reinvestment ratio:
Cash Reinvestment Ratio = increases in fixed assets and working capital / (net income + depreciation).



Cash reinvestment ratio definition and explanation:
This ratio indicates the degree to which net income is absorbed (reinvested) in the business.

A cash reinvestment ratio of greater than 1:1 (100%) indicates that more cash is being use4d in the business than being obtained.

The cash reinvestment ratio is included in many of the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.