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Liquidity measures measure a firm's ability to pay operating expenses and other short-term, or current, liabilities. Because current liabilities, which are debts that must be paid or obligations that must be fulfilled, within 1 year, are paid out of current assets, which are received as cash or otherwise used within 1 year.
A current asset is cash and any other company asset that will be turning to cash within one year.
Liquity ratio measure the company ability to pay its debts
