Distinguish between cash ratio and liquid ratio

Cash ratio is the proportion or percentage of the commercial bank deposits kept in cash form to meet the day demands of their customers and other obligations which exclude lending out as loans to borrowers.

Liquid ratio refers to the proportion of the total deposits of commercial banks which is kept in cash form of in form of assets that can easily be converted into cash e.g. bank drafts, cheques, etc.

Liquid ratio = Liquid assets/total assets.