Cash Ratio
Calculate the cash ratio, a liquidity ratio that measures a company’s ability to pay off its short-term liabilities with its cash and cash equivalents.
The cash ratio is calculated by dividing the sum of cash and cash equivalents and short-term investments by current liabilities. It provides insight into a company’s immediate ability to cover its short-term obligations using its most liquid assets.
The formula is as follows:
\[\text{Cash Ratio} = (\text{Cash and Cash Equivalents} + \text{Short Term Investments}) / \text{Current Liabilities}\]Also known as: most conservative liquidity ratio.
Cash Ratio in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_cash_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["GOOGL", "META", "NFLX"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_cash_ratio()
Or, after setting up the Finance Toolkit MCP, ask:
How much of their current liabilities could Alphabet, Meta and Netflix cover with cash and short-term investments alone from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| GOOGL | 2.1734 | 1.6416 | 1.3557 | 1.0733 | 1.2345 |
| META | 2.271 | 1.5074 | 2.0464 | 2.3162 | 1.9503 |
| NFLX | 0.7101 | 0.7639 | 0.8056 | 0.8911 | 0.8253 |
Parameters
get_cash_ratio accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (income and cash flow statement items) over, with balance sheet items averaged over the same number of period ends. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses single-period flows (per quarter and not annualized with quarterly data). | 4 |