Economics of Food and Agriculture
A liquidity ratio is a financial metric that measures a company's ability to cover its short-term obligations with its most liquid assets. This ratio helps assess the financial health and stability of a business, including farm operations, by indicating how easily it can pay off current liabilities without needing to sell long-term assets. It plays a vital role in financial management as it helps determine if a farm can meet immediate financial commitments while maintaining operational effectiveness.
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