These are ratios that help accompany to meet its short term maturity obligations. They are arbitrary measures that are used to verify a company’s capability to settle off short-term debts responsibilities. They basically measure the ability of the company to meet its near-term obligations. Current ratio and acid test ratio are example of liquidity ratio measures.
Current ratio is a liquidity measure that shows the rate at which a company is able to meet its short- term liabilities using its current assets. It indicates the capability of a company to meets its short term ...