[Verse 1]
When bills are due and cash runs tight
Companies need funds to make it right
Short-term debts are knocking at the door
Liquidity ratios tell us more
Current assets versus current debts
Shows us if the company's all set
Can they pay what's due within the year
These three ratios make it crystal clear
[Chorus]
Current, quick, and cash - the liquidity three
Measuring how well companies stay debt-free
Current includes all, quick drops inventory
Cash is most strict, tells the truest story
Divide by current liabilities, that's the key
Higher numbers mean more liquidity
[Verse 2]
Current ratio takes everything in sight
Current assets make the numerator bright
Inventory, cash, and receivables too
Divided by debts that are coming due
If it's two to one, that sounds pretty good
Company can pay like a business should
But sometimes inventory's hard to sell
So the quick ratio tells a story to tell
[Chorus]
Current, quick, and cash - the liquidity three
Measuring how well companies stay debt-free
Current includes all, quick drops inventory
Cash is most strict, tells the truest story
Divide by current liabilities, that's the key
Higher numbers mean more liquidity
[Bridge]
Quick ratio strips away the stock on shelves
Cash and receivables can help themselves
Most liquid assets are what we count
When immediate payment's paramount
Cash ratio is the strictest test of all
Only cash and equivalents stand tall
When creditors come calling at your door
This ratio shows what you're prepared for
[Verse 3]
Each ratio tells a different tale
About the company's financial trail
Current shows the broadest liquidity view
Quick shows what's more easily turned to cash too
Cash ratio's conservative but tells no lies
Only the most liquid will suffice
Together they paint a picture clear
Of short-term financial health each year
[Chorus]
Current, quick, and cash - the liquidity three
Measuring how well companies stay debt-free
Current includes all, quick drops inventory
Cash is most strict, tells the truest story
Divide by current liabilities, that's the key
Higher numbers mean more liquidity
[Outro]
When you analyze a company's might
These liquidity ratios shed the light
Can they pay their bills when they're due
These three ratios will see them through