What is Liquidity Ratio?
A definition of Liquidity Ratio
“A liquidity ratio is a financial metric used to determine a company’s ability to pay off its short-term liabilities with its current assets.”

Business Glossary > What is Liquidity Ratio?
Examples of Liquidity Ratio in a Sentence:
The company’s liquidity ratio indicates it is in a healthy financial position.
Analysts examined the liquidity ratio to assess the firm’s short-term financial stability.
Improving the liquidity ratio is crucial for the business to meet its immediate obligations.
Why is Liquidity Ratio Important in Business?
Understanding liquidity ratios is crucial for assessing a company’s ability to meet its short-term financial commitments. Investors and analysts use these ratios to evaluate financial stability and risk, ensuring that businesses can avoid potential cash flow issues.
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Associated Terms
Here are some associated business terms and synonyms for “Liquidity Ratio”:
- Current Ratio
- Quick Ratio
- Acid-Test Ratio
Apple Liquidity Ratio
Apple Inc. is known for maintaining a strong liquidity ratio, which reassures investors of its ability to meet short-term liabilities. By efficiently managing its current assets, Apple secures its position as a financially stable market leader.
Final Notes on Liquidity Ratio
When evaluating a company’s financial health, considering liquidity ratios is essential. Businesses should monitor these ratios to ensure sufficient assets are available to cover liabilities, avoiding cash flow challenges.
This has been a definition of Liquidity Ratio meaning.
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