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What is Liquidity?

Posted by Dairel Denton Posted on Sept 12 2017

 

Liquidity is a simple way of saying the company’s ability to pay bills.  Typically it means paying bills from cash or other assets that can be turned into cash easily and quickly. The quick ratio is an indicator of a company’s liquidity. 

The quick ratio is a financial ratio, sometimes referred the acid test ratio.  It compares the total amount of cash, marketable securities and accounts receivable to the total amount of current liabilities.  

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