I am not convinced that it is the best way to understand such things, but this site specializes in explaining investment ratios (and other financial terms) using illustrations, instead of the usual mathematical formulas.
The illustration above shows the quick ratio (also known as the acid test), a commonly-used measure of a company's ability to pay money that it owes in the short term. The quick ratio is actually defined as:
Basically, it just measures how much money you have available (the top of the ratio = assets on hand minus what you have to pay to keep the business running) divided by how much you owe (the bottom part; 'liabilities' are what the company owes. Bank overdrafts, which is how much your bank allows you to go into the hole, are excluded since they are on-going, more or less permanent ways of borrowing). It is best if the quick ratio is at least 1: you don't want to own or invest in (same thing, really) a company that has a ratio lower than 1, because it means that the company does not have enough quickly-available assets to pay its soon-due debts.
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