Liquidity Ratios

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Part 2 of finance ratios

Last updated 6:13 PM on 7/4/26

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Liquity Ratios Definition:

Measures how well a business can cover it’s short-term debt obligations, using different assets

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Cash Ratio

Cash / Current Liabilities

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Quick Ratio

Liquid Assets / Current Liabilities

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Current Ratio

Current Assets / Current Liabilities

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If Cash Ratio is greater than 1, that means:

A business can pay off it’s short-term debts with cash alone. Indicator of good financial health.