Degree Of Relative Liquidity - DRL
Definition of 'Degree Of Relative Liquidity - DRL'
A liquidity metric that looks at a company's ability to support short-term expenditures. Degree of relative liquidity is determined by looking at the total percentage of cash that a company has available on hand. The cash must be earned through regular operations and be able to be spent on expenditures and short-term debt obligations through a specific period.
Companies that possess a higher degree of relative liquidity will probably have less difficulty in retrieving funds for payment purposes.
Investopedia explains 'Degree Of Relative Liquidity - DRL'
As with all liquidity metrics, indications that a company is barely able to make short-term payments can be a sign that the company could be facing more serious financial issues in the long term. Financial distress as a result of inability to make debt payments could lead to bankruptcy.