Difference between liquidlty ratio and activity ration

Liquidity ratios and solvency ratios are tools investors use to make investment decisions. Liquidity ratios measure a company's ability to convert its assets to cash. On the other hand, solvency ratios measure a company's ability to meet its financial obligations.

Solvency ratios include financial obligations in both the long and short term, whereas liquidity ratios focus more on a company's short-term debt obligations and current assets.

Liquidity ratios gauge a company's ability to pay off its short-term debt obligations and convert its assets to cash. activity ratios measure a company's ability to meet its total financial obligations.

Liquidity ration is also known as short term solvency ratio which refers to the firms ability to meet its current financial obligations when they arises liquidity ratio studies the firms short term solvency and its abilities to pay its liabilities provides a measure of liquidity of a firm by creating relationships between its current assets and current liabilities.
WHILE IN ACTIVITY RATIO,it analyse the performance,efficiency and turn over ratio of management that how effectively management is using their assets.

Liquidity ratio refers to the firms ability to pay off its current obligations. In other words this ratio tells us whether the company will be able to pay its current liabilities in respect to the current assets that are available. On the other hand activity ratio tells the performance of the company and also how efficiently the management uses the assets of the company to generate revenue.

Liquidity Ration means the calculation of a company's available cash and marketable securities against outstanding debt. The ratio measures the company's ability to pay its short-term debts. A high ratio indicates a company with a low risk of default.

Activity Ratio assess how effectively a company is able to generate revenue in the form of cash and sales based on its asset, liability and capital share accounts. Examples of such ratios include the inventory turnover ratio and the accounts receivable turnover ratio.

Liquidity ratios are used to find out the short-term paying capacity of a firm, to comment short term solvency of the firm, or to meet its current liabilities, whereas Activity ratios measure the efficiency with which the resources of a firm are employed.

According to management prospective Liquidity ratios measure the adequacy of current and liquid assets and help evaluate the ability of the business to pay its short-term debts. The ability of a business to pay its short-term debts is frequently referred to as short-term solvency position or liquidity position of the business.
Whereas, Activity ratios (also known as turnover ratios) measure the efficiency of a firm or company in generating revenues by converting its production into cash or sales. Generally a fast conversion increases revenues and profits.

Ratio analysis is used to evaluate various aspects of companys operating and financial operations. Liquidity ratio measures the company's ability to satisy its shortly maturing commitments. It is an indicator of whether company's current assets will be sufficient to meet the company's obligation when they become due. Liquidity ratio are also known as balance sheet ratios. Activity ratio measures effectiveness of company using its resources. It shows how efficiently the assets of a firm are being utilized. Activity ratios are also known as Turnover ratio.

Ratios are vital tools of every financial analyst,without it financial analysis cannot be completed.
now,what is meant by liquidity & activity????????
Liquidity ratios measure the short term financial position of the firm. while the activity ratios measure the efficiency and effectiveness of a firm in managing its resources and assets

Financial ratios are use for comparing the strength and weakness of the company. There are different types of ratios like liquidity ratio, activity ratio, etc
Liquidity ratios measure a company's ability to pay debt obligations and its margin of safety through the calculation of metrics including the current ratio, quick ratio
Activity ratios measure a firm's ability to convert different accounts within its balance sheets into cash or sales.Companies typically try to turn their production into cash or sales as fast as possible because this will generally lead to higher revenues, so analysts perform fundamental analysis by using common ratios such as the total assets turnover ratio and inventory turnover.

Liquidity ratios measure the short term financial position of the firm. while the activity ratios measure the efficiency and effectivenss of a firm in managing its resources and assets..Liquidity ratios measure the company’s ability to satisfy shortly maturing commitments while activity ratios measure effectiveness of the company in using its resources.

The availability of cash,,thus Liquidity ratios are those ratios which explains about the cash position of a particular company,it helps us analyzing how much cash is available with the corporate and how much of it is not used or ideal.
Accounting ratios or Turnover ratios are the ratios which explains us about the ability of the company to convert it resources into sales.it tell us that how much time a company had taken to convert its resources in to sales or revenue

It is an indicator of whether company's current assets will be sufficient to meet the company's obligation when they become due. Liquidity ratio are also known as balance sheet ratios. Activity ratio measures effectiveness of company using its resources. It shows how efficiently the assets of a firm are being utilized. Activity ratios are also known as Turnover ratio
It is an indicator of whether company's current assets will be sufficient to meet the company's obligation when they become due. Liquidity ratio are also known as balance sheet ratios. Activity ratio measures effectiveness of company using its resources. It shows how efficiently the assets of a firm are being utilized. Activity ratios are also known as Turnover ratio.
WHILE IN ACTIVITY RATIO,it analyse the performance,efficiency and turn over ratio of management that how effectively management is using their assets.

Liquidity Ratio:
In Accounting liquidity means the ability of a company to meet its financial obligations. Liquidity ratios measure the company’s ability to satisfy shortly maturing commitments. Much insight can be obtained from these ratios about the company’s cash solvency at present as well as its ability to remain solvent .It can be calculated in 3 form:-
1. Current ratio
2. Cash ratio
3. acid ratio

Activity Ratios:
Also known as efficiency or turnover ratios, activity ratios measure effectiveness of the company in using its resources. Common measures computed are:-
1.Receivable
2. Payable and
3. Inventory turnover ratios.