Liquidity refers to how quickly an asset can be converted to cash without losing value. There are several common measures of liquidity: net working capital, which is current assets minus current liabilities; the current ratio, which is current assets divided by current liabilities; the quick ratio, which is current assets minus inventory divided by current liabilities; and the cash ratio, which is cash divided by current liabilities. These ratios are used to measure a company's ability to meet its short-term obligations using its most liquid assets.