The balance sheet of firm A shows the following:
Cash & Cash equivalents 386 -
Receivables 119 -
Inventories 204 -
Marketable securities 143 -
Short-term loans 649 -
Current portion of long-term debt 312
The cash ratio of the firm equals ________.
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A. B. C. D.A
The cash ratio is the most conservative liquidity ratio calculated using only cash and marketable securities relative to current liabilities. Thus, Cash ratio = (cash + marketable securities)/current liabilities In this case, Cash ratio = (386+143)/(649+312) = 0.55