Activity ratios are used to measure the speed with which various accounts are converted into sales or cash. Measures of overall liquidity are generally inadequate because differences in the composition of firms current assets and liabilities can significantly affect the firm's "true" liquidity. Therefore, it is prefered to evaluate how efficiently current assets specially debtors and inventory are used.

KEYWORDS: Activity Ratios, Overall Liquidity, Current Assets and Liabilities, Debtors and Inventory.