The ratios that measure a firm's ability to meet short-term obligations with short-term resources are called liquidity ratios. Common liquidity ratios include the current ratio, which compares current assets to current liabilities, and the quick ratio (or acid-test ratio), which further excludes less liquid inventory from current assets. These ratios indicate how easily a company can convert its assets into cash to pay for its near-term debts.
The ratios that refer to the ability of the firm to meet the short term obligations out of its short term resources?
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