Liquidity Ratios
Measuring Short-Term Financial Health
Liquidity ratios evaluate whether a company has sufficient current assets to meet its short-term obligations. These ratios are especially important to creditors, suppliers, and management because they indicate the company's ability to pay bills as they become due.
Tip
A very high liquidity ratio may indicate inefficient use of cash or other current assets.
Summary
Liquidity ratios measure a company's ability to satisfy short-term financial obligations.