ratios measure the degree to which a firm relies on borrowed funds in its operations.

The statement you provided refers to leverage ratios. Leverage ratios are financial metrics that help investors and analysts evaluate a company's debt levels. These ratios measure the proportion of a company's capital that comes from debt and assess the company's ability to meet its financial obligations.

Here are the steps to calculate a basic leverage ratio, the debt ratio:

1. Identify the company's total debt. This information can be found on the company's balance sheet and includes both short-term and long-term liabilities.

2. Identify the company's total assets. This is also found on the balance sheet and includes everything the company owns, such as cash, accounts receivable, property, and equipment.

3. Divide the total debt by the total assets.

4. Multiply the result by 100 to get a percentage.

This percentage represents the degree to which the company is financed by debt. A higher percentage means the company relies more heavily on borrowed funds in its operations.