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 how much of a company's assets are financed through debt. A higher debt ratio indicates greater financial risk, as it suggests that a larger portion of the company's assets is funded by borrowing. Investors and analysts often use the debt ratio to assess a company's financial health and stability. A debt ratio below 0.5 typically indicates that a company has more assets than liabilities, while a ratio above 0.5 may raise concerns about its ability to meet financial obligations. Understanding the debt ratio helps stakeholders make informed decisions regarding investments and creditworthiness.