What is the term for the accounting evaluation of a company's liquid assets versus its short-term liabilities?

The term for the accounting evaluation of a company's liquid assets versus its short-term liabilities is commonly referred to as the "quick ratio." This ratio is a measure of a company's ability to meet its short-term obligations using its most liquid assets, which typically include cash, cash equivalents, and accounts receivable, excluding inventory.

By focusing on liquid assets, the quick ratio provides a more stringent assessment of a company's short-term financial health than the current ratio, which includes inventory in its calculation. The quick ratio is particularly useful for assessing the financial stability of companies in industries where inventory might not be as readily convertible to cash compared to other assets.

This ratio is crucial for management and investors as it reflects the efficiency of a company in managing its working capital and its readiness to handle unforeseen economic downturns or financial hurdles. Understanding this metric is vital for making informed decisions regarding investment and creditworthiness of a business.