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Business Lindsay Emma Rudd

Liquidity Ratios
These rations allow managers and other interested parties to monitor a business's cash position. Even
profitable businesses can experience problems with liquidity and may be unable to pay their bills as
they fall due. Liquidity ratios measure the liquid assets held by a…

Page 2

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Business Lindsay Emma Rudd

Liquidity ratios are based on figures drawn from the Balance Sheet relating to a particular moment in
time. Because of this some caution should be exercised when drawing conclusions from this type of
ratio. The annual figures on the balance sheet may be unrepresentative of…


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