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Cash Ratio

Definition: Cash Ratio is a formula for measuring the liquidity of a company by calculating the ratio between all cash and cash equivalent assets and all current liabilities.
This ratio measures only the most liquid of all assets against current liabilities, and is therefore seen as the most conservative of the three liquidity ratios.
It excludes both inventory and accounts receivable in comparison to the Current Ratio.
It excludes inventory compared to the Quick Ratio.

More on cash ratio. More on financial ratios: Interest Coverage Ratio, Quick Ratio.