Cash Asset Ratio

A cash asset ratio is the value of cash and other highly liquid assets (such as marketable securities) divided by a company's current liabilities.

For example, let's say it has $150,000 in cash, $140,000 in securities, and $75,000 in bills that it owes. Take the gross assets of $290,000 and divide it by $75,000...the fraction yields a healthy cash asset ratio of 3.87. Any ratio over 1 that means the company has enough cash and other liquid assets to cover its liabilities in the short term. This is one of the key metrics that analysts use to determine the financial health of a company. See Current Ratio.