Cash Ratio Calculator is tool that finds out the ability to use cash and the cash equivalents. To pay its current liabilities, it is an indicator of company's short-term liquidity
- Cash Ratio:
- What does Cash Ratio mean?
- Cash ratio is the ratio of cash and cash equivalents of a company to its current liabilities. It measures the ability of a business to repay current liabilities by only using the cash and cash equivalents.
- Cash Ratio = Cash + Cash Equivalents/Current Liabilities
A company called ‘ZIMA’ has following assets and liabilities at the year ended December 31, 2017:-
Cash $34,390 Marketable Securities 12,000 Accounts receivable $17,874 Accounts Receivable 56,200 Prepaid Insurance 9,000 Total Current Liabilities 73,780
According to the formula, Cash Ratio is:-
- = (34,390 + 12,000) / 73,780
- = 46,390 / 73,780
- = 0.63
- Jun 10, 2018
- Tool Launched