'These ratios are calculated to measure the short -term solvency of the business Identify the ratios and state the significance of two ratios included in the above category.

Liquidity ratios / Current ratio and Quick ratio Significance of Current ratio: It provides a measure of degree to which current assets cover current liabilities. The excess of current assets over current liabilities provides a measure of safety margin available against uncertainty in realization of current assets and flow of funds. Significance of Quick ratio: It is a measure of the capacity of the business to meet its short-term obligations without any flaw.