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Liquidity ratio
Distinguishing Between Solvency and Liquidity Measurements.
November 24, 2023
How does the Solvency Ratio differ from liquidity ratios?
While the Solvency Ratio assesses a company's ability to meet long-term debts, liquidity ratios, such as the current ratio or quick ratio, focus on short-term obligations. Solvency emphasizes long-term financial health, while liquidity measures short-term solvency and cash flow adequacy.
Tags : Solvency Ratio , Liquidity Ratio , Financial Analysis