Brief summary of Liquidity ratio #finance #ratio

Brief summary of Liquidity ratio #finance #ratio

💧 Liquidity Ratio | Brief Summary & Easy Explanation
Liquidity Ratio measures a company’s ability to meet its short-term obligations using its current assets. It shows how easily a business can pay creditors, suppliers, and other immediate liabilities. Common liquidity ratios include the Current Ratio, Quick Ratio, and Cash Ratio. A strong liquidity position indicates good short-term financial health, while poor liquidity may lead to cash flow problems. Liquidity ratios are important for investors, lenders, managers, and students to analyze working capital efficiency and solvency.

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