Cash Ratio


Retirement Business Cash Ratio Calculator

[CP_CALCULATED_FIELDS id=”9″] Cash Ratio Explanation
The cash ratio is a conservative look to see if a company can cover liabilities which are due soon. Inventory and accounts receivables are more difficult to turn into immediate cash.

Interpretation of Cash Ratio

If your cash ratio is 1.00 or above that means that you should be able to pay all your short-term debts (current liabilities) like vendors.  Creditors like a high number. However, having a high number means that you have idle cash on hand which is not generating profits. Most businesses have a cash ratio below 1.00.

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