The debt ratio is a financial metric that measures the proportion of a company's total debt to its total assets. It is calculated by dividing total liabilities by total assets, providing insight into a company's financial leverage. A higher debt ratio indicates that a larger portion of the company's assets is financed through debt, which can imply higher financial risk. Investors and analysts often use the debt ratio to assess a company's financial health and stability. A debt ratio below 0.5 suggests that a company has more assets than liabilities, while a ratio above 0.5 may indicate potential challenges in meeting debt obligations.