The amount of an individual or company's
gross income that it spends on
debt service as a percentage of its total gross income. The higher the DTI is, the less likely it is that the individual or company will be able to
repay debt. As a result,
financial institutions use the DTI in informing decisions on whether or not to make
loans. Often, the "debt" in the term refers to all
liability payments (such as
employee wages, taxes, and
utility bills) and not simply to debt.