Liquidity ratio

Definition :

General liquidity ratio = (current assets / short-term debts) x 100
The ratio evaluates the short-term leasing cover per current asset

Reduced liquidity ratio = (current assets inventories / short-term debts) x 100
If the ratio is < 100, the company has to sell its inventories in order to pay its short-term debts

Immediate liquidity ratio = (invested movables + cash available) / short-term debts x 100
This ratio determines whether or not simple cash will suffice to pay short-term debts