Certified Financial Planner (CFP) Practice Exam 2026 – All-in-One Study Guide for Exam Success!

When assessing the financial health of individuals, a debt-to-income (DTI) ratio provides insight into how well debt is managed in relation to income. A total debt ratio under 36% of gross income is generally considered healthy and indicates that the individuals are not over-leveraged. This level of debt suggests that there is a manageable amount of debt compared to their income, which allows for financial stability and greater flexibility in budgeting.

In this case, classifying the total debt as a strength is appropriate because it reflects responsible financial behavior. Maintaining a debt level within this threshold typically indicates that Kim and Mark have the means to handle their current debt obligations comfortably while potentially leaving room for additional financial endeavors, such as savings and investments.

Higher debt-to-income ratios can pose risks and lead to financial stress, but being under 36% is often viewed positively by lenders and financial advisers. It can facilitate obtaining credit or qualifying for loans, as it demonstrates the borrowers’ ability to manage their debt without compromising their financial well-being.