Which of the following is a common liquidity ratio?

The current ratio is a key liquidity ratio that measures a company's ability to pay its short-term obligations with its short-term assets. It is calculated by dividing current assets by current liabilities. A higher current ratio indicates a stronger liquidity position, as it suggests that the company has more than enough assets to cover its liabilities that are due in the near term. This is particularly important for assessing a company's financial health, as it helps investors and creditors understand the risk of financial distress.

In contrast, the debt-to-equity ratio focuses on a company's leverage by comparing its total liabilities to its shareholders' equity; return on assets measures profitability against total assets; and gross profit margin evaluates the percentage of revenue that exceeds the cost of goods sold. None of these metrics specifically address a company's liquidity position, which is why the current ratio stands out as the appropriate answer for identifying a common liquidity ratio.