Unlike the current and quick ratios, the cash ratio ignores receivables and inventory. Most healthy companies have a cash ratio below 1 because holding too much cash is inefficient.
How to use the Cash Ratio Calculator
- Cash
- Cash equivalents
- Marketable securities
- Current liabilities
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter cash, cash equivalents, marketable securities and current liabilities.
Tips
- Use consistent periods (a year or a quarter) for flow figures and period-end values for balances.
- Average opening and closing balances when a ratio mixes a flow with a stock.
- Benchmark against competitors in the same industry.
- Read the ratio together with others – profitability, liquidity and efficiency tell different stories.
Common mistakes to avoid
- Using sales instead of cost of goods sold for inventory ratios.
- Mixing gross, operating and net profit.
- Ignoring one-off items that distort a single year.
Inputs explained
| Field | What to enter |
|---|---|
| Cash | Amount in your currency |
| Cash equivalents | Amount in your currency |
| Marketable securities | Amount in your currency |
| Current liabilities | Amount in your currency |
Example values
How the main result changes when Cash changes and everything else stays at the example values above:
| Cash | Cash ratio |
|---|---|
| 60,000 | 0.4 |
| 90,000 | 0.475 |
| 120,000 | 0.55 |
| 150,000 | 0.625 |
| 180,000 | 0.7 |
| 240,000 | 0.85 |
Formula
Cash ratio = (cash + cash equivalents + marketable securities) ÷ current liabilitiesWorked example
Inputs — Cash: $120,000; Cash equivalents: $40,000; Marketable securities: $60,000; Current liabilities: $400,000.
Results — Cash ratio = 0.55; Interpretation = Moderate cash cover.
Frequently asked questions
What is a good cash ratio?
0.5–1 is common; above 1 means more cash than current liabilities.
How is it different from the quick ratio?
The quick ratio also counts receivables.
Is a very high cash ratio good?
It's safe but may mean cash isn't being used productively.
What formula does the Cash Ratio Calculator use?
Cash ratio = (cash + cash equivalents + marketable securities) ÷ current liabilities.