What is the formula for calculating the debt ratio?

The debt ratio is a financial metric used to assess a company's financial leverage and stability by measuring the proportion of its total assets that are financed through debt. The formula for calculating the debt ratio is Total Liabilities divided by Total Assets. This calculation provides insight into how much of the company's assets are funded by borrowing, which can indicate the level of financial risk the company is experiencing. A higher debt ratio suggests that a larger portion of the company's assets is financed through debt, potentially leading to increased financial risk if the company is unable to meet its obligations.

In contrast, other options present different ratios that do not accurately represent the debt ratio. For example, the ratio measuring Total Assets to Total Owners Equity provides insight into the equity financing of the company but does not directly relate to its total liabilities. Similarly, the ratios involving current assets and current liabilities focus on liquidity and short-term financial position rather than the overall debt levels in relation to total asset financing. Therefore, the answer correctly identifies the specific formula representing the debt ratio.