Cash Ratio

Cash Ratio Calculation







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Cash ratio calculator is a finance or accounting tool to find the ratio between the sum of cash, cash equivalents and marketable or short-term securities to current liabilities of a company. It's a financial liquidity assessment tool used by investors to measure the ability of a company to pay off its current liabilities with the available fund. A higher cash ratio more than 1 generally indicates that the company is stronger ability to pay off its current liabilities with the readily available cash and cash equivalents and a lower ratio may indicate that the company may not be able to meet its current liabilities with the available cash.

Formula
Cash Ratio = (Cash + Cash Equivalents + Short-term Securities)/Current Liabilities