Which measure is used to manage and monitor liquidity in a company?

Operating cash flow is a critical measure used to manage and monitor liquidity within a company. It represents the cash that a company generates from its regular business operations, indicating how well it can fund its short-term obligations and operational requirements. A positive operating cash flow suggests that the company is capable of generating enough cash to cover its immediate expenses, such as payroll, rent, and utilities, which is essential for maintaining liquidity.

This measure provides insight into the company's ability to convert sales and other business operations into cash, which is vital for assessing its financial health. When operating cash flow is robust, it signals that the company can efficiently manage its cash without relying heavily on external financing, thus reinforcing its liquidity position.

Other measures mentioned have different focuses. For instance, while the debt coverage ratio assesses how well a company can manage its debt obligations, it is not directly tied to liquidity management. The dividend payout ratio indicates how much profit is returned to shareholders versus retained for reinvestment, which doesn't directly relate to liquidity. Similarly, risk-adjusted return is a performance metric that evaluates investment returns against risk but does not provide real-time insights into a company's liquidity status.