what happens if the quick ratio indicates a firm is not liquid 
in this case a liquidity crisis can arise even at healthy companies if circumstances arise that make it difficult to meet short term obligations such as repaying their loans and paying their employees or suppliers one example of a far reaching liquidity crisis from history is the global credit crunch of 2007 08 where many companies found themselves unable to secure short term financing to pay their immediate obligations if new financing cannot be found the company may be forced to liquidate assets in a fire sale or seek bankruptcy protection the bottom linea company can t exist without cash flow and the ability to pay its bills as they come due by measuring its quick ratio a company can better understand what resources it has in the very short term in case it needs to liquidate current assets though other liquidity ratios measure a company s ability to be solvent in the short term the quick ratio is among the most aggressive in deciding short term liquidity capabilities 