Liquidity Ratios

The quick ratio measures the liquidity of a business and its ability to meet its short term liabilities and debts. It is calculated by dividing current assets less inventory by current liabilities. It is also known as the Acid Test Ratio.

The current ratio measures the liquidity of a business and its ability to meet its short term liabilities and debts. It is calculated by dividing current assets by current liabilities. It is also known as the Working Capital Ratio.