In this section, you will learn how to use liquidity ratios to evaluate a company’s ability to meet its short-term debt obligations. You will learn how to calculate and interpret liquidity ratios, such as the current ratio, the quick ratio, and the cash ratio, which indicate how well a company can convert its assets into cash to pay off its current liabilities. You will also learn how to compare liquidity ratios across different companies and industries, and how to identify the signs of liquidity problems and financial distress in a company. By the end of this section, you will have the skills and knowledge to assess a company’s short-term financial health using liquidity ratios.