This implies that the company has an unnecessarily large amount of cash supply. Generally cash ratio is defined as ratio of a company's total cash and cash equivalents to its current liabilities.Then cash ratio can be determined by using the formula which is (Cash + Cash equivalents) Ă· Current liabilities.If cash &cash equivalents > current liabilities,it means the company has more cash.If cash &cash equivalents= current liabilities,it means the company has enough cash to pay the liabilities..If cash &cash equivalents<current liabilities,it means company utilized its assets well to earn profits.
