Asked by Santana Williams on Apr 25, 2024
Verified
The cash ratio measures how much cash is on hand to cover current liabilities.
Cash Ratio
A liquidity ratio that measures a company's ability to pay off its short-term liabilities with its cash and cash equivalents.
Current Liabilities
Short-term obligations that will be paid or settled within the coming year in cash, goods, other current assets, or services.
- Recognize the key financial ratios used to measure liquidity, profitability, and leverage.
Verified Answer
RV
Rahila Valani7 days ago
Final Answer :
True
Explanation :
The cash ratio is calculated by dividing cash and cash equivalents by current liabilities and represents the ability of a company to cover its short-term obligations with its existing cash resources.
Learning Objectives
- Recognize the key financial ratios used to measure liquidity, profitability, and leverage.
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