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The cash ratio is total cash and cash equivalents divided by current liabilities. It measures a company's ability to repay short-term debt using cash or cash equivalents.
The cash ratio is a method of measuring liquidity of a company. It compares the cash and cash equivalent position against short-term borrowings, also called current liabilities. It helps determine if a business can repay its short-term borrowings only by using cash and cash equivalents.
The cash ratio or cash coverage ratio is a liquidity ratio that measures a firm's ability to pay off its current liabilities with only cash and cash equivalents. The cash ratio is much more restrictive than the current ratio or quick ratio because no other current assets can be used.
The cash ratio is a liquidity ratio that measures a company’s ability to pay off short-term liabilities with highly liquid assets. Compared to the current ratio and the quick ratio, it is a more conservative measure of a company’s liquidity position.
Calculate the cash ratio with the cash ratio formula. Finally, it's time to calculate the cash ratio. We can complete the calculation by using the following formula: cash ratio = cash and cash equivalents / current liabilities. Hence, the Company Alpha's cash ratio = $14,400,000 / $12,000,000 = 1.2x.
The cash asset ratio is the current value of marketable securities and cash, divided by the company's current liabilities. Also known as the cash ratio, the cash asset ratio...
Cash ratio is calculated by dividing absolute liquid assets by current liabilities: Both variables are reported on the balance sheet (statement of financial position). Cash equivalents are short-term, highly liquid investments that can be easily converted into cash.
The Cash Ratio is defined as a company’s Cash & Cash-Equivalents / Current Liabilities, and it captures a company’s ability to repay its short-term obligations using only its Cash, without selling assets, borrowing more, or collecting owed customer payments.
The current ratio measures a company's ability to pay off its current liabilities (payable within one year) with its total current assets such as cash, accounts receivable, and inventories....
Photo: Tetra Images/Getty Images. The cash ratio is one of three common methods to evaluate a company's liquidity —its ability to pay off its short-term debt. Each of the methods calculates the ratio of a company's short-term assets to its short-term liabilities. Learn how the cash method ratio is used and how it varies from other methods.