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Liquidity Ratio

Liquidity Ratio:

It is also called as short-term ratio. This ratio helps to understand the liquidity in a business
which is the potential ability to meet current obligations. This ratio expresses the relationship
between current assets and current assets of the business concern during a particular
period. The following are the major liquidity ratio:

Liquidity Ratio
[Post Image Courtesy of DigitalArt at FreeDigitalPhotos.net]

Current Ratio = Current Assets / Current Liability

Quick Ratio = Quick Assets / Quick or Current Liability

About Author Mohamed Abu 'l-Gharaniq

when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries.

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