What is the primary focus of a firm's debt-ratio?

The primary focus of a firm’s debt-ratio is leverage analysis. The debt ratio is a financial metric that provides insight into the extent to which a company is utilizing debt to finance its assets. It is calculated by dividing total liabilities by total assets, which effectively indicates what proportion of a company's assets are financed through debt.

Understanding leverage is crucial for assessing a firm’s financial risk and its ability to meet long-term obligations. A higher debt ratio suggests a higher degree of leverage, which can amplify returns during good times but also increases risk during downturns. Consequently, analyzing the debt ratio helps stakeholders evaluate the firm's financial structure and its potential implications for financial stability and investment viability.

The other choices, while related to finance, do not directly pertain to the primary concern of the debt ratio. Working capital management focuses on the short-term financial health and operational efficiency, profitability assessment measures a company’s ability to generate earnings relative to its revenue and expenses, and liquidity evaluation assesses a company's ability to meet short-term obligations. These aspects are important but do not capture the essence of leverage analysis that the debt ratio represents.