liquidity is the ability to pay bills when they are due and to meet unexpected needs for cash. The ratios that relate to liquidity involve working capital or some part of it since working capital must be used to pay debts as they mature. Common liquidity ratios include the current ratio, the quick ratio, receivable turnover, and inventory turnover. A company's survival depends on its ability to earn a profit. Investors become stockholders in a company for only one reason - dividends and capital gains. Because profitability will typically affect liquidity, profitability is important to both investors and creditors. Common profitability ratios include profit margin, asset turnover, return on assets, return on equity, and earnings