Common ratios to measure liquidity include the current ratio, the quick ratio, and the cash ratio. Common efficiency ratios include accounts receivable turnover, total asset turnover, inventory turnover, and days’ sales in inventory

Each of these three ratios includes more (cash ratio) or less liquid (current ratio) current assets in its measure of liquidity Liquidity ratios help analysts measure how well an organization can meet its short-term obligations (liabilities) as they come due.

cash ratio — represents the firm’s cash and cash equivalents divided by current liabilities; often used by investors and lender to assess an organization’s liquidity. current ratio — current assets divided by current liabilities; used to determine a company’s liquidity (ability to meet short-term obligations). quick ratio — also known as the acid test ratio ; ratio used to determine a firm’s ability to pay short-term debts using its most liquid assets. solvency — implies that a company can meet its long-term obligations and will likely stay in business in the future.