What is the cash ratio and how is it used?

The cash ratio is most commonly used as a measure of a company's liquidity. If the company is forced to pay all current liabilities immediately, this metric shows the company's ability to do so ...

What's a good cash ratio?

Key Takeaways The cash ratio is a liquidity ratio that measures a company's ability to pay off short-term liabilities with highly liquid assets. Compared to the current ratio and the quick ratio, it is a more conservative measure of a company's liquidity position. There is no ideal figure, but a ratio of at least 0.5 to 1 is usually preferred. More items...

What is the equation for cash ratio?

How to calculate the cash coverage ratio The formula for calculating the cash coverage ratio is: (Earnings Before Interest and Taxes (EBIT) + Depreciation Expense) ÷ Interest Expense = Cash...