Current Ratio:The current ratio measures a company's ability to pay short-term obligations by comparing its current assets to its current liabilities. It indicates the company's liquidity and its capacity to meet its short-term financial commitments.
Quick Ratio (Acid-Test Ratio): The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity that excludes inventory from current assets, focusing only on the most liquid assets to cover current liabilities.
Cash Ratio:The cash ratio is the most conservative liquidity ratio, as it only considers a company's cash and cash equivalents (such as marketable securities) in relation to its current liabilities, providing a snapshot of its immediate liquidity position.