Liguidity ratios are used to measure a firm's ability to meet its $-$Select$-$obligations as they come due. Two of the most commonly used liquidity ratiosare the: $(1)$ Current ratio and $(2)$ Quick, or acid test, ratio. The current ratio is the most commonly used measure of $-$Select$-$ y solvency. Its equation is:Current assetsCurrent ratio $=$ Current liabilities TipsIf a firm is having financial difficulty, it typically begins to pay its accounts payable more slowly and to borrow from the bank, both of which will increase its current $-$Select$-$the sale of$-$Select$-$causing a decline in the current ratio. The quick ratio is a measure of a firm's ability to pay off $|-$Select$-$obligations without relying on$,$ which are typically the least liquid of a firm's current assets. Its equation is: