Liquidity ratios (such as the current and the quick ratios)tell whether a small business will be able to meet its short-term obligations as they come due.

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Liquidity ratios specifically measure a small business's ability to pay off short-term obligations as they come due. The current ratio compares current assets to current liabilities, while the quick ratio (also known as the acid test ratio) compares quick assets (cash, marketable securities, and accounts receivable) to current liabilities. Both ratios are indicators of a small business's liquidity and its ability to meet its short-term financial obligations.

Liquidity Ratios (Such as the Current and the Quick Ratios)tell