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- Dictionarycash ratio
noun
- 1. the ratio of the liquid assets of a company to its current liabilities.
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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.
- Will Kenton
Sep 30, 2024 · The cash ratio is a financial metric that evaluates a company’s liquidity by measuring its ability to pay off short-term liabilities with its most liquid assets.
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 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.
Oct 10, 2024 · The cash ratio measures a company’s ability to pay its short-term debts using only cash and cash equivalents. It’s one of many financial ratios that investors and lenders use to measure the health of a business and the risk of lending it additional money.
- $10,000
- $2,000 monthly × 12 months = $24,000
- $800 × 12 months = $9,600
- $7,000
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.
Aug 29, 2024 · Cash ratio is an excellent way to measure a company's liquidity. Compared to other liquidity ratios, cash ratio tells us a company's ability to pay down its short-term liabilities using only its most liquid asset and without liquidating other assets.
