Liquidity analysis is the process of assessing a company’s ability to pay off its short-term debt obligations. It entails measuring and analyzing various metrics related to the availability of cash, such as current ratio and quick ratio. The analysis looks at how the liquidity of a company has changed over time and how it compares to other companies in the same industry. A good understanding of liquidity analysis can give investors insight into the financial health of a company and help them make informed decisions about investing.