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Investopedia explains 'Cash Asset Ratio'
The cash asset ratio is similar to the current ratio, except that the current ratio includes current assets such as inventories in the numerator. Some analysts believe that including current assets makes it difficult to convert them into usable funds for debt obligations. The cash asset ratio is a much more accurate measure of a firm's liquidity.
For example, if a firm had $130,000 in marketable securities, $110,000 in cash and $200,000 in current liabilities, the cash asset ratio would be (130,000+110,000)/200,000 = 1.20. Ratios greater than 1 demonstrate a firm's ability to cover its current debt, but ratios that are too high might indicate that a company is not allocating enough resources to grow its business.
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