## How to interpret liquidity ratios to assess financial strength?
Liquidity ratios are an essential tool for assessing a company's financial health, particularly its ability to meet short-term obligations. For investors and traders, understanding these indicators is crucial for making informed decisions about supporting a project or organization.
### The three pillars of liquidity analysis
**The current ratio: the classic barometer**
The current ratio represents the relationship between current assets and current liabilities. It provides an initial assessment of short-term financial stren
View OriginalLiquidity ratios are an essential tool for assessing a company's financial health, particularly its ability to meet short-term obligations. For investors and traders, understanding these indicators is crucial for making informed decisions about supporting a project or organization.
### The three pillars of liquidity analysis
**The current ratio: the classic barometer**
The current ratio represents the relationship between current assets and current liabilities. It provides an initial assessment of short-term financial stren