Cash ratio is the ratio of the balance of quick assets after deducting accounts receivable to current liabilities, which best reflects the company's ability to directly repay current liabilities.

Cash ratio is generally considered to be above 20%.

However, if this ratio is too high, it means that the company's current assets have not been used rationally, and cash assets have low profitability. Too high an amount of such assets will lead to an increase in the company's opportunity cost.

Cash ratio is the ratio of the balance of quick assets after deducting accounts receivable to current liabilities, which best reflects the company's ability to directly repay current liabilities.

Cash ratio is generally considered to be above 20%.

However, if this ratio is too high, it means that the company's current assets have not been used rationally, so the profitability of cash assets is low. Too high an amount of such assets will lead to an increase in the opportunity cost of the company.

The cash ratio calculation formula is: cash ratio = (cash + marketable securities) / current liabilities *100% cash ratio can reflect the company's ability to pay cash immediately.

In addition, it should be noted that the cash ratio excludes inventory and receivables.

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