What does the debt ratio measure?

The debt ratio is a financial metric that specifically measures the proportion of a person's or entity's total debt relative to their total assets. This indicates the level of financial leverage and helps in assessing overall financial health. A higher debt ratio could signal higher risk, as it implies that a greater proportion of one's assets have been financed through debt rather than equity or personal savings.

Other options focus on different financial relationships. The comparison of total assets to total income looks at income generation potential rather than debt management. The comparison of financial assets to retirement savings addresses investment aspects and future planning rather than the balance between debt and assets. Lastly, the comparison of monthly payments to annual income would be more indicative of cash flow management and debt servicing capacity, rather than the overall financial leverage depicted by the debt ratio. Thus, option C correctly identifies the purpose of the debt ratio by highlighting the relationship between total debt and total assets.