Liquidity ratios are financial ratios that measure a company's ability to meet its short-term obligations and convert its assets into cash quickly. They provide insights into a company's liquidity position and its ability to cover its short-term liabilities. The correct answer to the question is option 'D', the Quick ratio.

The Quick ratio, also known as the Acid-Test ratio, is a liquidity ratio that measures a company's ability to pay off its current liabilities using its most liquid assets. It is a more stringent measure of liquidity compared to the current ratio because it excludes inventory, which is often the least liquid asset.

The formula for calculating the Quick ratio is as follows:

Quick Ratio = (Current Assets - Inventory) / Current Liabilities

The Quick ratio considers only assets that can be quickly converted into cash or used to pay off current liabilities. It typically includes cash, marketable securities, and accounts receivable. By excluding inventory, which may take longer to convert into cash, the Quick ratio provides a more conservative measure of a company's liquidity.

The Quick ratio is an important indicator of a company's short-term liquidity position. A ratio of 1 or higher indicates that a company can pay off its current liabilities without relying on the sale of inventory. A ratio below 1 suggests that a company may struggle to meet its short-term obligations.

The Quick ratio is particularly useful for businesses with slow inventory turnover or those that face challenges in quickly converting inventory into cash. It helps assess a company's ability to cover its immediate financial obligations and provides insights into its overall financial health.

In conclusion, the Quick ratio is a liquidity ratio that measures a company's ability to pay off its current liabilities using its most liquid assets. It excludes inventory and provides a conservative measure of a company's liquidity position.