Which financial ratio is crucial for assessing a company’s liquidity?

The current ratio is a key financial metric used to assess a company's liquidity, which measures its ability to meet short-term obligations with its current assets. Specifically, it is calculated by dividing a company's current assets by its current liabilities. A higher current ratio indicates a greater ability to cover short-term debts, which is critical for ensuring that a company can maintain operations and avoid financial distress in the short term.

In the context of financial ratios, while the return on equity evaluates profitability in relation to shareholder equity, and the debt to equity ratio analyzes the proportion of debt a company uses to finance its assets, these metrics do not directly indicate the company's liquidity position. The operating margin measures the efficiency of a company in generating profit from its operations but does not reflect its immediate liquid asset availability to cover liabilities. Thus, among the provided options, the current ratio is the most relevant measure for liquidity assessment.