Cash & Liquidity
Cash Coverage Ratio
Available cash measured against monthly fixed operating commitments.
Why Cash Coverage Is the Survival Metric
Cash coverage answers the most basic question an oversight body can ask: how long can the entity keep operating if revenue stalls? Treasury and the AGSA treat months of cash cover as a core liquidity and going-concern indicator, because an entity that cannot fund its fixed commitments is technically insolvent regardless of its accrual surplus. AuditPro Core measures available cash against monthly fixed operating commitments so leadership sees the runway in months, not just a closing bank balance.
The Numbers
AuditPro Core renders this view from your tenant's live, tamper-evident records. The figures below are illustrative sample data.
Cash Coverage
1.4 months
▼ from 2.1
Cash & Equivalents
R 412 m
at month-end
Monthly Fixed Cost
R 294 m
operating base
Norm
1-3 months
national guidance
Cash Coverage Trend (months)
Liquidity Components
| Component | Amount (R m) | Note |
|---|---|---|
| Primary Bank Account | 248 | Unrestricted |
| Call Investments | 164 | Liquid |
| Unspent Grants (cash) | 145 | Restricted |
| Monthly Employee Costs | 168 | Committed |
| Monthly Bulk Purchases | 126 | Committed |
Figures shown are illustrative sample data for demonstration. AuditPro Core renders these views from your own tenant's live, tamper-evident records.
Cash coverage ratio
The ratio expresses available, unencumbered cash as a number of months of fixed operating commitments such as salaries and bulk purchases. A figure approaching one month signals acute liquidity risk.
Unencumbered cash
Only cash genuinely available counts; conditional grant cash and other ring-fenced funds must be excluded. Coverage calculated on total cash overstates the true runway.
Fixed commitments
Fixed monthly commitments are the costs that cannot be deferred, principally employee costs and bulk water and electricity. These define the minimum cash the entity must generate to survive.
How AuditPro Core Bridges the Gap
- Reconciliation: available cash is reconciled to bank balances net of ring-fenced and committed amounts, so coverage reflects genuinely usable funds.
- Continuous monitoring: the coverage ratio updates as balances and commitments change, giving an always-current liquidity view.
- Exception workflow: coverage falling below a defined threshold triggers escalation to the CFO and the financial-recovery process where applicable.
- Audit-ready export: the coverage calculation exports as evidence for the going-concern assessment and Treasury liquidity reporting.
Key Takeaways
- Coverage in months, not a closing balance, shows true financial runway.
- Exclude ring-fenced grant cash; only unencumbered funds give real cover.
- Define fixed commitments tightly to know the minimum cash needed to survive.
- Coverage near one month is a serious going-concern signal.
See This on Your Own Data
AuditPro Core renders this dashboard from your tenant's live, tamper-evident records — every figure traceable to source.