What do the liquidity ratios tell you in the financial analysis?
Answers
Explanation:
Liquidity ratios are the ratios that measure the ability of a company to meet its short term debt obligations. ... They show the number of times the short term debt obligations are covered by the cash and liquid assets. If the value is greater than 1, it means the short term obligations are fully covered.
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Liquidity ratios are an important class of financial metrics used to determine a debtor's ability to pay off current debt obligations without raising external capital. Liquidity ratios measure a company's ability to pay debt obligations and its margin of safety through the calculation of metrics including the current ratio, quick ratio, and operating cash flow ratio.
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