What is short-term liquidity ratios?

Short-term liquidity ratiOS are financial metrics that assess a company's ability to meet its short-term obligations using its most liquid assets. Key ratiOS include the current ratio, which compares current assets to current liabilities, and the quick ratio, which excludes inventory from current assets. These ratiOS help investors and creditors evaluate a company's financial health and its capacity to cover short-term debts. A higher ratio indicates better liquidity and financial stability.