Debt Ratio refers to the percentage of a person's income that goes towards paying off their debts. It is calculated by dividing total monthly debt payments by total monthly income, and then multiplying the result by 100 to get the percentage. A high debt ratio indicates that an individual has a large portion of their income going towards paying off debts, which can make it difficult for them to save money or invest in other areas. On the other hand, a low debt ratio means that an individual has more disposable income available after all debts have been paid.