The two basic measures of liquidity are:

The correct answer is option 2- Current ratio and quick ratio.

The two basic measures of liquidity are Current ratio and quick ratio.

Liquidity ratios gauge a company's ability to meet its short-term financial obligations promptly. Liquidity ratios are calculated to measure the short-term solvency of the business, i.e. the firm’s ability to meet its current obligations. These are analysed by looking at the amounts of current assets and current liabilities in the balance sheet. Two common liquidity ratios are the current ratio and the acid-test ratio or quick ratio.