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Jun 13, 2024 · 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, or cash asset ratio, is a liquidity metric that indicates a company’s capacity to pay off short-term debt obligations with its cash and cash equivalents.
May 21, 2024 · The cash ratio formula is the sum of cash and cash equivalents divided by current liabilities. Cash and cash equivalents are the sum of cash, demand deposits and short-term marketable securities. Short-term debts, accounts payable, accrued liabilities, and deferred revenues make up the current liabilities.
Aug 21, 2024 · The cash ratio is the ratio that measures the ability of the company to repay the short-term debts with the cash or cash equivalents, and it is calculated by dividing the total cash and the cash equivalents of the company with its total current liabilities.
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.
Cash ratio is computed using the following formula: Cash ratio = (Cash and cash equivalents + Marketable securities) ÷ Current liabilities. The current ratio measures liquidity by comparing all current assets with current liabilities.
Aug 29, 2024 · 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.
