👉 Reserves math involves calculating the difference between a company's current assets and its liabilities, providing insight into its financial health and liquidity. This is often expressed as a reserve ratio, which is the ratio of reserves (cash, cash equivalents, and other liquid assets) to total current liabilities. By subtracting total current liabilities from reserves, you get the reserve ratio, a key metric used by investors and analysts to assess a company's ability to meet short-term obligations without needing to raise additional funds. A higher reserve ratio indicates stronger liquidity and financial stability, as it shows a larger portion of current assets is set aside for immediate needs.