Use current and quick ratios to question liquidity quality, not just liquidity quantity.
A healthy ratio can hide weak liquidity. Current ratio is broad Current ratio divides current assets by current liabilities. It is a useful first pass because it asks whether near-term assets exceed near-term obligations. Quick ratio is stricter Quick ratio removes inventory and other less-liquid assets. That matters when inventory is slow, specialized, seasonal, or likely to sell only with discounts. It also matters when receivables are current by date but weak by collectability. The professional move is asset-quality review Do not stop at the ratio. Ask what turns into cash, when it turns, what value it turns at, and…
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