Here we have some liquidity ratios, and they're gonna help us measure a company's ability to pay off its short-term obligations. The first one is OWC to sales, and you just take your OWC and divide it by the sales figure. What's the meaning of it though? Well, it looks at the ratio of short-term assets required to operate a business, or cash tied up in operations compared to sales. Let's have a think about its meaning to a business. As a business grows, its sales may grow, let's say the sales doubles. Well, you might expect the OWC or cash tied up in operations to double as well, but why would this be the case? Well, as your sales grow, other things included in OWC, such as inventory has to grow as well, your accounts receivable would grow as well. So if you are comparing this over time for a growing company with growing sales, your OWC would grow as well. You'd hope that this ratio would stay constant. or even better, you'd hope that this ratio would be declining slightly. As your sales grows, your OWC grows, but not quite as fast. Next up, we had the current ratio, which takes current assets and divides it by current liabilities, this tests your ability to pay your short-term obligations. Quite literally, can my current assets pay off my current liabilities? We'd want this ratio to be above a figure of one, and ideally far above one. Next up is the cash ratio, where you take your cash divided by your current liabilities. This tests your ability to repay short-term obligations using just cash. The reason we exclude things like inventory and other illiquid assets is that they can't quickly be changed into cash and then used to pay off your obligations. Again, we want this figure to be higher than one so that our suppliers know that at any one time they could be paid, and they'd feel happy to supply us.