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Answer Posted / kanchan kumar das
Liquidity ratio we mean that how much fund is available
from current assets excluding stock to mitigate the current
liabilities within next 12 months. This is simply the ratio
of current assets and current liabilities which shows how
much strong the company is to pay-off the current
liabulities. It is also known as current account ratio.
So the formula:
Current Assets
Liquidity Ratio = ----------------------
Current Liabilities
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