The cash ratio ignores both inventory and accounts-receivable, which makes it pessimistic in normal conditions and realistic in a crisis, when customers slow their payments precisely as suppliers demand theirs faster.
Most healthy companies sit well below 1 and should. A persistently high cash ratio may indicate a balance sheet carrying more cash than the business needs, which is a capital-allocation question rather than a safety one.
Example: Northwind Tools holds $285M of cash and securities against $310M of current liabilities, a cash ratio of 0.92. Adding the undrawn $150M revolver, near-term liquidity is comfortable.
Related: quick-ratio, current-ratio, cash-and-equivalents, capital-allocation, marketable-securities