Liquidity is a firm’s ability to satisfy its short-term obligations as they come due. Current Ratio is a measure of liquidity calculated by dividing the firm’s current assets by its current liabilities. Quick Ratio is a measure of liquidity calculated by dividing the firm’s current assets minus inventory by its current liabilities. Net Working Capital is a company's current assets less its current liabilities.

1. LIQUIDITY
RATIOS
LIQUIDITY
A firm’s ability to satisfy its short-term
obligations as they come due.
CURRENT RATIO
Current Ratio =
Current Assets ÷ Current Liabilities
QUICK (ACID-
TEST) RATIO
Quick Ratio =
(Current Assets - Inventory) ÷ Current Liabilities
NET WORKING
CAPITAL
Net Working Capital =
Current Assets - Current Liabilities
CREATED BY TARIQ AL-BASHA