When analyzing a company's debt ratio:

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The debt ratio measures a company's ability to pay its total liabilities, including both short-term and long-term debt. A higher debt ratio indicates that a larger portion of the company's assets are financed through debt, which can increase the company's risk of financial distress. The norm for debt ratios varies by industry, but generally, a lower debt ratio is preferable, as it indicates that the company has a stronger financial position and is less reliant on borrowed funds.

When Analyzing a Company's Debt Ratio