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What is a liquidity ratio?

Liquidity ratios help the firm to gauge on its ability to pay off its short-term debts. Generally, the higher the ration, the better is the vompany's position to pay off its debt. The most common liquidity ratios are: Current ratio & Acid-Test ratio.

Answered by Fahmeed R. • Accounting tutor

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What is a liquidity ratio?

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