Cash Ratio Calculator

Rs
Rs
Finance

The Cash Ratio Calculator measures a company's ability to pay off its current liabilities using only cash and cash equivalents. Enter cash and current liabilities to get the ratio, the percentage covered, and a plain-English interpretation.

Formula

Cash Ratio = (Cash + Cash Equivalents) ÷ Current Liabilities
  • A ratio of 1.0 means cash exactly covers current liabilities.
  • Below 1.0 means the company relies on other assets or income to meet short-term obligations.
  • A very high ratio can signal idle cash that could be invested.

Rs 500,000 cash, Rs 800,000 liabilities

Inputs
  • Cash & Cash Equivalents: 500000 Rs
  • Current Liabilities: 800000 Rs

500,000 ÷ 800,000 = 0.63, so cash covers about 63% of current liabilities.

Frequently asked questions

What is a good cash ratio?
Many analysts view 0.5 to 1.0 as healthy. Above 1.0 is very safe but may indicate under-utilised cash.
How is cash ratio different from current ratio?
The cash ratio counts only cash and equivalents, while the current ratio includes all current assets such as receivables and inventory.