What is Cash Ratio?
Cash Ratio is a conservative liquidity ratio that compares cash and cash equivalents to current liabilities.
It answers one question: “If revenue pauses tomorrow, how much of near-term obligations can we cover with cash alone?”
It matters for credit risk, covenant discussions, cash runway planning, and working-capital strategy (vs. Current Ratio, Quick Ratio, Net Working Capital, and Cash Conversion Cycle).
Formula
Example
Interpretation: the business holds $0.75 of cash-like liquidity for every $1.00 of short-term obligations (before collections, inventory sales, or refinancing).
How to Use the Cash Ratio Calculator
Frequently Asked Questions
What does a Cash Ratio of 0.75 mean?
It means you have $0.75 of cash + cash equivalents for every $1.00 of current liabilities—so you could cover ~75% of near-term obligations immediately, without collecting receivables or selling inventory.
Which balance sheet line items should I include in “Cash & Cash Equivalents”?
Use the “Cash and cash equivalents” total from your balance sheet (typically cash in bank + very short-term, highly liquid equivalents). Don’t mix in inventory or accounts receivable.
What exactly counts as “Current Liabilities” for this calculator?
Use total current liabilities due within ~12 months (e.g., AP, accrued expenses, short-term debt/current portion of LTD, taxes payable, deferred revenue if classified as current).
How is Cash Ratio different from Quick Ratio or Current Ratio?
Cash Ratio uses only cash + cash equivalents (most conservative). Quick Ratio adds other near-cash items like receivables. Current Ratio includes all current assets, including inventory.
Sources & Methodology