Liquidity ratios


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Liquidity ratios

Ratios that measure a firm's ability to meet its short-term financial obligations on time, such as the ratio of current assets to current liabilities.

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.
References in periodicals archive ?
they will be subjected to a minimum liquidity ratio (MLR) of 20 percent by January 1 next year.
THREE commercial banks are operating below the Minimum Regulatory Liquidity Ratio of 30 per cent, the Central Bank of Nigeria (CBN) has said.
The aim of this study is to investigate the effects of 2008 global economic crisis on the financial statements and liquidity ratios of the energy sector companies operating in Istanbul Stock Exchange (BiST).
According to him, the bank has a strong liquidity ratio of 13.7pc and capital adequacy ratio of 17.73pc.
Accordingly, the repurchase rate and reserve repurchase rate have been maintained at 7.5 per cent and 6.5 per cent respectively while the cash reserve ratio and the statutory liquidity ratio have been left untouched at 4 per cent and 21.5 per cent.
To do this, we first evaluate Moroccan bank's liquidity positions and bank's financial performance through different liquidity ratios. We then identify determinants of Moroccan bank's performance using a panel data regression and analyze the relationship between liquidity risk and financial performance of Moroccan banks.
It should be noted that the liquidity ratios have predictive characteristics.
NBB's liquidity ratios are currently among the best in the GCC region, it added.
With 13 per cent growth in depositors recorded last year BLME said it is well positioned to increase financing further and meet the more stringent regulatory liquidity ratios.
Liquidity risk can be measured by two main methods: liquidity gap and liquidity ratios. The liquidity gap is the difference between assets and liabilities at both present and future dates.
They still have to agree on the most sensitive issues (systemic buffers, liquidity ratios, leverage ratio, limits on bonuses).
Taipei, July 16, 2012 (CENS) -- The Financial Supervisory Commission (FSC) plans to follow the new version of Basel Capital Accord and introduce two new standards for the liquidity ratios of financial institutions, which will entail stricter definitions for qualified liquid assets.