Enter the total cash and cash equivalents along with the current liabilities into the calculator. The calculator will evaluate and display the cash ratio of the business.
Cash Ratio Formula
The following formula can be used to calculate the cash ratio of a business.
CR = C / CL
- Where CR is the cash ratio
- C is the cash and cash equivalents
- CL is the current liabilities.
Cash Ratio Definition
A cash ratio is a financial measure of how “liquid” or solvent a business is. In other words, how much cash a business has relative to it’s liabilities. A larger cash ratio means a company has a greater amount of cash to work with respect to it’s liabilities. This typically means the business is more profitable.
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