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Explain why a long-term creditor should be interested in liquidity ratios.

Public Comments

1. A long term creditor should be interested in Liquidity Ratios because if they are considering loaning money in the long term they need to know how liquid a prospective clients assets are. They need to know that all of the clients money isn't locked up in long term investments. They need to know that a client will have enough liquid assets(cash flow) to pay there monthly payments. If they look at liquidity ratios and look at the trend for a few years they should be able to tell of the client will pay his payments if given the credit.