Cash ratio
How much of the debt due within a year is covered by cash already in the bank.
It is the only liquidity test that assumes nothing at all about collecting or selling anything.
How it is computed here
Cash and cash equivalents / current liabilities
Combines more than one basis. See the note. The pipeline prefers the data vendor's published trailing-twelve-month ratio when one exists, and falls back to recomputing from the latest filed fiscal year when it does not. Those two are different measurements: the vendor figure puts twelve months of flow over the most recent quarterly balance sheet. The source trail on each figure names which path produced it. Filed under health. Higher is the stronger reading, other things equal.
No published threshold exists for this figure, so this page prints none. Read it against the company's own history and its peers instead.
When it misleads
- Deliberately severe. Very few healthy companies score above 1 and they are not better for it.
- Cash trapped offshore or pledged as security is counted here but is not actually available.
Not meaningful for banks, insurers: the product prints n/m with the reason rather than a number for them.
Questions
How is cash ratio calculated?
Cash and cash equivalents / current liabilities. Combines more than one basis. See the note. The pipeline prefers the data vendor's published trailing-twelve-month ratio when one exists, and falls back to recomputing from the latest filed fiscal year when it does not. Those two are different measurements: the vendor figure puts twelve months of flow over the most recent quarterly balance sheet. The source trail on each figure names which path produced it.
What does cash ratio tell a value investor?
It is the only liquidity test that assumes nothing at all about collecting or selling anything.
When does cash ratio mislead?
Deliberately severe. Very few healthy companies score above 1 and they are not better for it. Cash trapped offshore or pledged as security is counted here but is not actually available.