Cash Ratio Calculator
From cash plus marketable securities and current liabilities, compute the cash ratio — the strictest liquidity measure.
Input Data
Results
At a glance:Cash ratio = (cash + marketable securities) / current liabilities. It is the strictest liquidity test — can you pay short-term debt with only cash and near-cash? Ratio 1 = cash covers all current liabilities; below 1 = you would also need inventory/receivables. Example: cash 200k + securities 100k, current liabilities 500k → 0.6 (covers 60%). Unlike current/quick ratios, it excludes inventory and receivables (which may not convert in time). A very high ratio can also mean idle, unproductive cash. WARNING: Point-in-time snapshot; too high may signal poor capital deployment. Education, not advice.
Formula
Cash ratio = (cash + marketable securities) / current liabilities.
$$$CashRatio=\\dfrac{Cash+CashEquivalents}{CurrentLiabilities}$$$$$$\\dfrac{600{,}000}{900{,}000}\\approx0.67$$$How to Use
- Enter cash and marketable securities.
- Enter current liabilities.
- View the cash ratio.
FAQ
Is the cash ratio the same as the quick ratio?
No. The quick ratio = (current assets - inventory) / current liabilities — it includes receivables. The cash ratio = (cash + marketable securities) / current liabilities — it includes only the most liquid assets, excluding receivables and inventory entirely. So the cash ratio is the strictest of the three (current ≥ quick ≥ cash).
What is a healthy cash ratio?
It depends on the industry. A ratio near or above 1 means very strong short-term safety; but many healthy firms run below 1 because they confidently rely on receivables and inventory turnover. Too high a cash ratio may mean cash is sitting idle instead of being invested or used for growth. Compare with peers and the firm's own history.
Why exclude inventory and receivables?
Because in a liquidity crunch they may not convert to cash fast or at full value — inventory may need discounting, receivables may be slow or doubtful. The cash ratio assumes only cash and near-cash securities are reliably available to meet immediate obligations, giving the most conservative view of solvency.
Why can a high cash ratio be a warning?
Excess cash beyond operating needs can mean the firm is not deploying capital efficiently — missed investment, buyback or debt reduction. It may reflect caution or a lack of opportunities. So a high cash ratio is not unconditionally 'good'; judge it against the business strategy and return on the idle cash.
Any Hong Kong notes?
For Hong Kong SMEs and listed firms, liquidity ratios help lenders and suppliers assess short-term risk; banks review them when granting facilities. The HKMA sets liquidity standards for banks. Use the cash ratio alongside the current and quick ratios and the cash-flow statement; for formal analysis consult an accountant. Education, not advice.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.