Which financial ratio measures a company's ability to pay off current liabilities?

The current ratio is the correct answer because it specifically assesses a company's short-term liquidity and its ability to pay off current liabilities with its current assets. It is calculated by dividing current assets by current liabilities. A higher current ratio indicates that the company has more than enough assets to cover its short-term obligations, which suggests a healthy liquidity position.

In contrast, the debt-to-equity ratio focuses on a company’s long-term solvency and financial leverage by comparing total liabilities to shareholders' equity, rather than short-term liabilities. Operating margin is a measure of operational efficiency and profitability, showing how much profit a company makes on its sales before interest and taxes, but it does not address liquidity. Return on equity measures how efficiently a company can generate profits from its shareholders' equity, which again does not relate directly to the ability to meet current obligations.