Cash Ratio

The cash ratio is the ratio of cash and marketable securities to current liabilities. It equals cash and marketable securities divided by current liabilities, Cash ratio indicates the extent to which the liabilities can be liquidated immediately. Sometimes called the ratio of liquidity

The cash ratio measures a company’s ability to pay short-term liabilities using only cash and near-cash assets.

- Used in planning, organizing, and controlling business operations.
- Used when setting KPIs, policies, procedures, and improving processes.

- Example: Management applies **Cash Ratio** when designing policies and monitoring performance against targets.

- Why it matters: Improves execution, accountability, and decision speed while reducing operational waste.