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Cash Ratio Formula

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Cash Ratio is a liquidity ratio that measures a company's ability to pay off its current liabilities solely with its cash and cash equivalents. Check FAQs

Cash R = (\frac{C}{CL})

Cash_R - Cash Ratio?C - Cash and Cash Equivalents?CL - Current Liabilities?

Cash Ratio Example

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Here is how the Cash Ratio equation looks like with Values.

Here is how the Cash Ratio equation looks like with Units.

Here is how the Cash Ratio equation looks like.

3.9933 = (\frac{119800}{30000})

3.9933 = (\frac{119800}{30000})

3.9933 = (\frac{119800}{30000})

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Cash Ratio Solution

Follow our step by step solution on how to calculate Cash Ratio?

FIRST Step Consider the formula

Cash R = (\frac{C}{CL})

Next Step Substitute values of Variables

∴

Cash R = (\frac{119800}{30000})

Next Step Prepare to Evaluate

∴

Cash R = (\frac{119800}{30000})

Next Step Evaluate

∴

Cash R = 3.99333333333333

LAST Step Rounding Answer

∴

Cash R = 3.9933

Cash Ratio Formula Elements

Variables

Cash Ratio

Cash Ratio is a liquidity ratio that measures a company's ability to pay off its current liabilities solely with its cash and cash equivalents.

Symbol: Cash_R

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Cash Ratio

Cash and Cash Equivalents

Cash and Cash Equivalents refer to assets that are readily convertible into cash and have a short-term maturity of typically three months or less from the date of purchase.

Symbol: C

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Cash and Cash Equivalents

Current Liabilities

Current Liabilities are the company debts or obligations that are due within one year.

Symbol: CL

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Current Liabilities

Other formulas in Liquidity Ratios category

Go Current Ratio

CR = \frac{CA}{CL}

Go Quick Ratio

QR = \frac{CA - I LR}{CL}

Go Average Collection Period using Receivables Turnover

ACP = \frac{365}{RTR}

Go Business Current Ratio

CR = \frac{CA}{CL}

How to Evaluate Cash Ratio?

Cash Ratio evaluator uses Cash Ratio = (Cash and Cash Equivalents/Current Liabilities) to evaluate the Cash Ratio, The Cash Ratio formula is defined as a liquidity ratio that measures a company's ability to pay off its current liabilities solely with its cash and cash equivalents. Cash Ratio is denoted by Cash_R symbol.

How to evaluate Cash Ratio using this online evaluator? To use this online evaluator for Cash Ratio, enter Cash and Cash Equivalents (C) & Current Liabilities (CL) and hit the calculate button.

FAQs on Cash Ratio

What is the formula to find Cash Ratio?

The formula of Cash Ratio is expressed as Cash Ratio = (Cash and Cash Equivalents/Current Liabilities). Here is an example- 3.993333 = (119800/30000).

How to calculate Cash Ratio?

With Cash and Cash Equivalents (C) & Current Liabilities (CL) we can find Cash Ratio using the formula - Cash Ratio = (Cash and Cash Equivalents/Current Liabilities).

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Cash Ratio Formula

Cash Ratio Example

Cash Ratio Solution

Cash Ratio Formula Elements

Other formulas in Liquidity Ratios category

How to Evaluate Cash Ratio?

FAQs on Cash Ratio

Variable Name