The Cash Ratio is a financial metric that measures a company's ability to repay its current liabilities with cash or cash equivalents only. It's one of the most stringent and conservative measures of liquidity. Firms need cash to pay employees and meet other obligations. Running out of cash can be very costly for a firm, so firms often gauge their cash position by calculating the cash ratio.
Learn Cash Ratio with interactive examples and practice exercises in our Performance Metrics module.
This interactive learning module helps you understand Cash Ratio through hands-on practice and real-world examples.