Apply liquidity ratios in short-term financial decision making. Liquidity ratios determine an organization's ability to meet its short-term...

Apply liquidity ratios in short-term financial decision making.

Liquidity ratios determine an organization's ability to meet its short-term obligations. Some examples of liquidity ratios are current ratio, acid-test ratio, and days' sales in average receivables.

Consider the various liquidity ratios and respond to the following:

• Discuss the importance of liquidity ratios in short-term financial decision making.