Liquidity Financial Ratios

The Cash Ratio is a stringent financial metric that measures a company's ability to cover its short-term liabilities using only its cash and cash equivalents. This ratio excludes other current assets, providing a conservative view of a company's liquidity.

The Current Ratio is a financial metric that measures a company's ability to pay off its short-term liabilities with its short-term assets. It indicates the liquidity and financial health of a company by comparing current assets to current liabilities. A higher ratio suggests that the company is more capable of covering its short-term debts.

The Quick Ratio, also known as the Acid-Test Ratio, is a financial metric used to evaluate a company's ability to meet its short-term obligations with its most liquid assets. Unlike the current ratio, the quick ratio excludes inventory from current assets, considering only cash, marketable securities, and accounts receivable. This provides a more stringent measure of liquidity.