The Current Ratio and Quick Ratio are financial metrics used to assess a business’s short-term liquidity. The Current Ratio measures a company’s ability to cover short-term debt obligations with liquid assets such as cash, checks, and marketable securities; this ratio is calculated by dividing total current assets by total current liabilities. The Quick Ratio measures a company’s ability to pay off its most immediate liabilities without having to sell inventory or other assets; it is calculated by subtracting inventories from the current assets figure, then dividing by current liabilities. By studying these two important ratios, you can gain insight into a company’s ability to meet its short-term financial obligations.