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There are generally 3 ratios that measure a corporation's liquidity:
1. Working Capital, or Current Assets - Current Liabilities
2. Current Ratio, or Current Assets/Current Liabilities
3. Quick Acid Test, or (Current Assets - Inventory - Prepaid Assets)/Current Liabilities

The most major problem with these ratios is the fact that long term debts and assets do not appear in the calculation. That could lead an observer to conclude that a company is in much better (or worse) financial shape as otherwise shown. A company with a poor Working Capital ratio could be u