The formula for calculating the cash ratio is ________.
A) (Cash) / Total liabilities
B) (Cash + Cash equivalents) / Total current liabilities
C) (Cash + Cash equivalents) / Total assets
D) (Cash equivalents) / Total current liabilities

Question

Quizplus · Accepted Answer

The cash ratio is a measure of a company's ability to pay off its current liabilities with its cash and cash equivalents. The formula for calculating the cash ratio is (Cash + Cash equivalents) / Total current liabilities. So, option B is the correct choice.

The Formula for Calculating the Cash Ratio Is ________