Calculate Cash Ratio
The cash ratio focuses on the most liquid assets available to cover short-term obligations.
Formula: Cash Ratio = (Cash + Cash Equivalents) Γ· Current Liabilities
Keep rates, balances, prices, and time periods on the same basis. An annual rate should not be combined with a monthly period unless the formula accounts for that conversion.
Check the final amount against the starting figure and rate. A large unexpected difference often points to a period or percentage entered in the wrong form.