<Li> The operating cash flow ratio can be calculated by dividing the operating cash flow by current liabilities . This indicates the ability to service current debt from current income, rather than through asset sales . </Li> <P> For different industries and differing legal systems the use of differing ratios and results would be appropriate . For instance, in a country with a legal system that gives a slow or uncertain result a higher level of liquidity would be appropriate to cover the uncertainty related to the valuation of assets . A manufacturer with stable cash flows may find a lower quick ratio more appropriate than an Internet - based start - up corporation . </P> <P> Liquidity is a prime concern in a banking environment and a shortage of liquidity has often been a trigger for bank failures . Holding assets in a highly liquid form tends to reduce the income from that asset (cash, for example, is the most liquid asset of all but pays no interest) so banks will try to reduce liquid assets as far as possible . However, a bank without sufficient liquidity to meet the demands of their depositors risks experiencing a bank run . The result is that most banks now try to forecast their liquidity requirements and maintain emergency standby credit lines at other banks . Banking regulators also view liquidity as a major concern . </P>

How to calculate liquidity ratio from balance sheet