liquidity ratio

noun

1. A financial measure showing how easily a person or company can use its current assets to pay short-term debts.

   B2

   countableformal

   • "The company's liquidity ratio improved after it sold some of its inventory."B2
   • "Banks examine liquidity ratios to assess whether a business can meet its short-term obligations."B2
   • "A high liquidity ratio indicates that the company can easily meet its short-term obligations."B2
   • "A declining liquidity ratio may indicate that the firm is becoming increasingly dependent on external financing."C1