How do you calculate liquidity ratio?

Answer 1

You have to calculate the Quick ratio and the Current Ratio

Quick ratio: (cash+accounts receivables+short-term investments)/current liabilities

Current ratio: Current Assets/Current liabilities

Whoever submitted this did not answer the question fully. I don't know the answer but I see nothing here that says "Liquidity ratio =" or means the same thing. I have no idea what to do with quick ratio and current ratio....

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What Does Liquidity Ratios Mean?

A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts.

Common liquidity ratios include the current ratio, the quick ratio and the operating cash flow ratio. Different analysts consider different assets to be relevant in calculating liquidity. Some analysts will calculate only the sum of cash and equivalents divided by current liabilities because they feel that they are the most liquid assets, and would be the most likely to be used to cover short-term debts in an emergency.

A company's ability to turn short-term assets into cash to cover debts is of the utmost importance when creditors are seeking payment. Bankruptcy analysts and mortgage originators frequently use the liquidity ratios to determine whether a company will be able to continue as a going concern.

From Investopedia.