Financial Terms Glossary

Liquidity Ratio


A statistical measure of a company's ability to pay its bills as they fall due. The availability of cash and other 'liquid' assets to pay creditors on time.
It includes :
Current Assets / Liabilities %
Quick Ratio
Acid tests.


Cash 'flows', 'moves', 'peaks', 'bubbles', 'drains'. It 'oils' businesses and helps them run smoothly. The association with terms of fluidity to cash is age old. Liquidity ratios quantify how much cash is spare, available, or otherwise quickly obtainable. High liquidity ratios are a good sign that there is sufficient cash to deliver plans.

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