Final answer:
The debt ratio is a financial ratio that measures the proportion of a company's debt to its total assets. It is calculated by dividing the total debt by the total assets and multiplying by 100 to express the result as a percentage.
Step-by-step explanation:
The debt ratio is a financial ratio that measures the proportion of a company's debt to its total assets. It is calculated by dividing the total debt by the total assets and multiplying by 100 to express the result as a percentage. The formula for calculating the debt ratio is:
Debt Ratio = (Total Debt / Total Assets) x 100
For example, if a company has a total debt of $500,000 and total assets of $1,000,000, the debt ratio would be 50%:
Debt Ratio = (500,000 / 1,000,000) x 100 = 50%