Liquidity Ratio Liquidity ratio is a financial ratio that measure a company’s ability to repay both short and long-term obligations. Current Ratio = Current Assets ÷ Current Liabilities It evaluates the ability of a company to pay short-term obligations using current assets (cash, marketable securities, current receivables, inventory, and prepayments). The ratio of 1 is … Continue reading Liquidity Ratio | Accounting – Formulas, Examples, Questions, Answers