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 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
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_cash_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
cash_ratios = toolkit.ratios.get_cash_ratio()
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| AAPL | 0.4992 | 0.3137 | 0.4236 | 0.3695 | 0.3302 |
| TSLA | 0.8986 | 0.8306 | 1.012 | 1.2686 | 1.3893 |
Parameters
The function accepts the following parameters:
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.