Which of the following ratios is used as a measurement of liquidity?

The current ratio is a key measure of liquidity, which assesses a company's ability to meet its short-term obligations using its most liquid assets. This ratio is calculated by dividing current assets by current liabilities. A higher current ratio indicates that the company possesses sufficient assets to cover its short-term liabilities, thus demonstrating a favorable level of liquidity.

In contrast, return on investment (ROI) measures the profitability relative to the investment made, and isn't directly related to a company's liquidity. The price to earnings (P/E) ratio evaluates the correlation between a company's share price and its earnings per share, providing insights mainly into market valuation and investor expectations rather than liquidity. The debt to equity ratio, meanwhile, assesses a company's financial leverage and capital structure, focusing on how much debt is used in relation to shareholder equity rather than its ability to handle short-term financial obligations. Thus, the current ratio stands out as the best indicator of liquidity among the available options.