What is Liquidity Ratios?

Liquidity Ratios

Those ratios that speak about to the cash situation in an organization and hence its capability to pay liabilities when due. Normally, the higher the worth of the ratio, the larger the margin of safety that the corporation holds to cover short-term debts.

LR = liquid assets / short-term liabilities. 

Liquidity Ratio Analysis:

It is set or ratios and figures used to identify a firm's ability to pay its short-term liability.

There are three fundamentals liquidity ratios that provide short-term liquidity. Following are these

1. Current Ratios
2. Quick Ratios
3. Cash Ratios
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