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Finance for
Non-Financial Professionals
Module 3
Liquidity Ratios
A class of financial metrics
Liquidity Ratios
A class of financial metrics
Used to determine a company's ability to
pay off its short-term debt obligations
Liquidity Ratios
A class of financial metrics
Used to determine a company's ability to
pay off its short-term debt obligations
The higher the value of the ratio, the larger
the margin of safety that the company
possesses to cover short-term debts
Liquidity Ratios:
Liquidity Ratios:
Liquidity Ratios:
Liquidity Ratios:
Measures a companys ability to meet its shortterm obligations with its most liquid assets
Liquidity Ratios:
Measures a companys ability to meet its shortterm obligations with its most liquid assets.
Quick Ratio =
(current assets inventories) / current liabilities
Liquidity Ratios:
Measures a companys ability to meet its shortterm obligations with its most liquid assets
Quick Ratio =
(current assets inventories) / current liabilities