liquidity ratio
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Related to liquidity ratio: Activity Ratio, Solvency Ratios
Cash Asset Ratio
A ratio of a company's cash and liquid assets to its total liabilities. A cash asset ratio measures a company's liquidity and how easily it can service debt and cover short-term liabilities if the need arises. As a result, potential creditors use this ratio in determining whether or not to make short-term loans. It is also called the liquidity ratio and the current ratio.
Cash Ratio
1. A ratio of a company's cash and liquid assets to its total liabilities. A cash ratio is a measure of company's liquidity and how easily it can service debt and cover short-term liabilities if the need arises. As a result, potential creditors use this ratio in determining whether or not to make short-term loans. It is also called the liquidity ratio and the cash asset ratio.
2. In banking, a ratio of a bank's cash and cash equivalents to its demand deposits. See also: Reserve requirement.
2. In banking, a ratio of a bank's cash and cash equivalents to its demand deposits. See also: Reserve requirement.
liquidity ratio
1. A measure of a company's ability to meet its short-term obligations achieved through a comparison of financial variables. See also current ratio, quick ratio, working capital.
2. The value of trading in a stock that is required to change the stock's price by 1%. A high ratio indicates the stock has considerable liquidity. A stock's liquidity ratio is of primary importance to institutions and traders that deal in large volume and that wish to avoid securities with a lack of liquidity.