Liquidity ratios
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Related to Liquidity ratios: current ratio, Leverage ratios, Profitability ratios, Efficiency Ratios, Solvency Ratios
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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
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.
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