It is hard to compare the averages of companies in different industries. In addition, firms want to do better than average. Seasonal factors are also difficult to determine. Accounting practices differ. In addition, the question arises as to whether a ratio is good or bad according to the industry and operating philosophy of management.
Caution is required when using ratios.
In order to manage cash, review all your control procedures involving cash receipts and cash disbursements both company wide and by departments. Make sure the proper controls are in place. Foremost, you need to draft the cash budget. You need to determine based on seasonality what you expect your cash inflow and cash outflow to be. You can begin by looking at the historical information presented in the financial statements.