Cash and cash equivalents are divided by ________ to determine the cash ratio.

Name: Cash and cash equivalents are divided by ________ to determine the cash ratio.
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Question

Quizplus · Accepted Answer

Cash ratio is calculated by dividing cash and cash equivalents by total current liabilities. This ratio measures the ability of a company to meet its short-term liabilities with its cash resources. Fixed assets, equity, and total long-term liabilities are not relevant in the calculation of this ratio.

Cash and Cash Equivalents Are Divided by ________ to Determine