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Take a LookQuick Definition
Measures how completely a company can pay its liabilities.
There's More to Financial Analysis Than You Think...
The Financial Analysis Success Kit can help!
Why you should take a look at the Financial Analysis Success Kit:
We've combined all our highly popular financial analysis tools into one megafinancialanalysiskit that will save you hundreds of dollars if purchased separately. The kit contains 9 files packed with the most important financial ratio analysis tools you can find to help rocket your way to mastering financial analysis. The kit includes:

The eBook "Learn Ratio Analysis In Minutes"

The Learn Financial Ratio Analysis Excel Spreadsheet (2 versions!)

A BONUS eBook..."Key Financial Statement Terms"

Another HUGE BONUS...FivePart Financial Ratio Cheat Sheet Series
The result? You get all these professionally created tools for a great low price.
Learn more on our product page:
Cash Ratio Formula
Explanation of Cash Ratio
Also called the Cash Asset Ratio, the Cash Ratio is the most rigid liquidity ratio used to measure a company’s ability to cover liabilities in the short term. The Quick Ratio and Current Ratio are similar, but both are somewhat less strict.
Since Cash and Cash Equivalents and Marketable Securities are the most liquid and can be utilized by the company almost immediately, these two can be used to pay liabilities at a moments notice.
Importance of Cash Ratio
The Cash Ratio should be at least 1.0 for any company, showing they can completely pay their liabilities if they had to. An increasing Cash Ratio is a positive sign, showing that the company is better able to cover its obligations to creditors.