Effeicient management of the inflow and outflow of cash palys a curial role in the overall performence of a business. Cash is the most liquid form od\f assets which safeguards the security intrest of a business. Cash including bank balance plays a vital role in the total networking capital. The ratio of cash to working capital significance the proportion of cash to the total net working capital and can be calculated by dividing the cash including bank balance by the working capital.
Cash to Working Capital Ratio = Cash / Working Capital
Cash is not an end in itself, it is a means to achieve the end. Therefore, only a required amount of cash is necessary to meet day to day operations. a higer proportion of cash may lead to shrinkage of profits due to idleness of resources of a firm.
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