Price to cash ratio

The Price to cash (per share) ratio is a valuation metric that measures the relationship between a company's stock price and its cash and short-term investments per share. It indicates how much investors are willing to pay for each unit of cash and short-term investments held by the company.

Price to cash ratio = Closing price / Cash per share

Cash per share = Cash and short-term investments / Diluted shares outstanding

If Cash per share is negative, the Price to cash ratio calculation will be meaningless, and the result should be considered invalid or empty.

A lower Price to cash ratio suggests that a company's stock is undervalued or relatively cheap compared to its cash and short-term investments, which may indicate a buying opportunity. Conversely, a higher ratio may indicate that the stock is overvalued or expensive relative to its cash and short-term investments. This metric is useful for bond investors as it provides insight into the issuer's liquidity and ability to meet its short-term obligations.