---
title: "Definition of Cash Ratio"
url: https://signalscreener.fr/definition/cash-ratio/
markdown_url: https://signalscreener.fr/definition/cash-ratio.md
description: "The most conservative liquidity ratio, measuring a company's ability to pay short-term debts with only cash and cash equivalents."
type: glossary-definition
site: Signal Screener
language: en
keywords:
  - "Cash Ratio"
translations:
  de: https://signalscreener.fr/de/definition/cash-ratio.md
  es: https://signalscreener.fr/es/definition/cash-ratio.md
  fr: https://signalscreener.fr/fr/definition/cash-ratio.md
---

# Cash Ratio

## What is Cash Ratio?

The most conservative liquidity ratio, measuring a company's ability to pay short-term debts with only cash and cash equivalents.

## Think of it like this

Like checking if you have enough cash in your wallet to pay all bills due today - no credit cards, no selling stuff.

## Formula

```
Cash Ratio = (Cash + Cash Equivalents) ÷ Current Liabilities
```

- **Cash**: Money in bank accounts
- **Cash Equivalents**: Short-term investments easily converted to cash
- **Current Liabilities**: Debts due within one year

## Why it matters

- Shows immediate ability to pay debts
- Most stringent liquidity test
- Important during financial stress
- Indicates financial cushion

## What's a good value?

| Range | Rating | What it means |
|---|---|---|
| < 0.2 | Low | May struggle with unexpected expenses |
| 0.2-0.5 | Adequate | Normal for most industries |
| 0.5-1.0 | Strong | Comfortable cash position |
| > 1.0 | Very High | Could deploy cash more efficiently |

## Real-world example

Apple maintains a cash ratio above 0.5, providing a strong safety cushion.

---

This is educational content, not financial advice.

Source: [Definition of Cash Ratio](https://signalscreener.fr/definition/cash-ratio/) on Signal Screener. Free to quote and cite with attribution and a link to that URL, which is the canonical one.

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