Definition:

Cash & Short Term Investments per Share is a financial metric that indicates the amount of cash and short-term investments available per outstanding share of a company's stock. It provides insight into the liquidity and financial health of a company on a per-share basis.

Formula:

Cash & Short Term Investments per Share = (Cash + Short Term Investments) / Total Outstanding Shares

How to use the metric:

Investors and analysts use this metric to assess a company's liquidity position relative to its share count. A higher value suggests that the company has more liquid assets available per share, which can be a positive indicator of financial stability and the ability to meet short-term obligations.

Limitations:

This metric does not account for the company's liabilities, operational efficiency, or profitability. It only provides a snapshot of liquidity and may not reflect the overall financial health or long-term viability of the company. Additionally, it can be skewed by large cash reserves that are not necessarily indicative of operational success.

Applies to:

This metric is particularly useful in industries where liquidity is crucial, such as technology, pharmaceuticals, and other sectors with high research and development costs. It is also relevant for companies with significant cash reserves or those undergoing rapid growth.

Doesn't apply to:

Industries with high capital expenditures, such as utilities or manufacturing, may not find this metric as relevant. These industries often require significant reinvestment of cash into operations, which can result in lower cash reserves relative to their share count.

Summary:

Cash & Short Term Investments per Share is a useful metric for evaluating a company's liquidity on a per-share basis. While it provides insight into the company's ability to cover short-term obligations, it should be used in conjunction with other financial metrics to gain a comprehensive understanding of the company's financial health.