Which financial ratio measures the extent to which the company's capital is in cash or cash equivalents?
A) quick ratio
B) current ratio
C) cash ratio
D) strategic ratio
E) inventory ratio

Question

Quizplus · Accepted Answer

The cash ratio measures the extent to which the company's capital is in cash or cash equivalents. It is calculated by dividing the sum of cash and cash equivalents by the company's current liabilities. The quick ratio (A) measures a company's ability to meet its short-term obligations with its most liquid assets. The current ratio (B) measures a company's ability to meet its short-term obligations with its current assets. The strategic ratio (D) and inventory ratio (E) are not commonly used financial ratios.

Which Financial Ratio Measures the Extent to Which the Company's