Degree of relative liquidity

The degree of relative liquidity is the proportion of an organization’s cash flows generated by normal operations that is available for the settlement of its current liabilities. The portion of cash that can be used in this measurement is only the cash available for use in settling obligations within a specific date range. A business that has a lower degree of relative liquidity may have difficulty settling its obligations in a timely manner.

Related Courses

Business Ratios Guidebook 
The Interpretation of Financial Statements