What is Liquidity Ratio?
Liquidity Ratio A financial metric measuring an entity’s ability to meet short-term obligations using liquid assets. Common types include current ratio and quick ratio, as disclosed under IFRS and US GAAP.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Liquidity Ratio” Used in Practice?
Liquidity ratios are routinely analyzed by creditors and regulators to assess a company’s ability to cover short-term liabilities with available assets.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Liquidity Ratio?
A financial metric measuring an entity’s ability to meet short-term obligations using liquid assets. Common types include current ratio and quick ratio, as disclosed under IFRS and US GAAP.
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