> The dimensionless %age terminology is misleading These ratios are not percentages; they're measured in years = [balance in dollars] / [flow in dollars / year

> The dimensionless %age terminology is misleading These ratios are not percentages; they're measured in years = [balance in dollars] / [flow in dollars / year], by convention. In the case of households, debt/income gives you a rough estimate of how many years of income it would take to pay all debt, with everyone understanding that not all income can go to pay debts. The ratio is a rough measure of debt service capacity, measured in years. In the case of businesses, debt/EBITDA gives you a rough estimate of how many years of operating cash flows would take the company to pay all debt, , with everyone understanding that not all operating cash flow can go to service debts. The ratio is a rough measure of debt service capacity, measured in years. In the case of governments, debt/GDP it gives you a rough measure of how many years of output the entire economy would have to produce to match the balance of public debts, with everyone understanding that economic output can never be taxed at 100%. The ratio is a rough measure of debt service capacity, measured in years.