Which of the following is a liquidity ratio?

The current ratio is a liquidity ratio, which measures a company's ability to meet its short-term obligations using its most liquid assets. It is calculated by dividing current assets by current liabilities. This ratio provides insight into the company's short-term financial health and operational efficiency.

By assessing the current ratio, stakeholders can determine whether a company has enough resources to cover its debts in the near term. A higher current ratio indicates a stronger liquidity position, suggesting that the company can easily settle its short-term liabilities without facing cash flow issues.

In contrast, the other choices represent different financial metrics: gross profit margin measures profitability, the debt-to-equity ratio indicates financial leverage, and return on investment evaluates the efficiency of an investment. While all are important financial indicators, only the current ratio specifically addresses liquidity.