The liquidity ratio shows the company's ability to meet its current debt obligations and a measurement of the firm's margin of safety.

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The liquidity ratio is a financial ratio that measures a company's ability to pay off its short-term debt obligations. It is also an indicator of the company's margin of safety, as it shows how easily the company can generate cash to meet its immediate financial obligations. Generally, a higher liquidity ratio implies a better financial position and a lower risk of insolvency.

The Liquidity Ratio Shows the Company's Ability to Meet Its