Debt-to-EBITDA is a financial ratio that compares a company's debt to its earnings before interest, taxes, depreciation, and amortization (EBITDA). It is used to assess a company's financial leverage and its ability to meet its debt obligations. The formula for Debt-to-EBITDA is:
Debt-to-EBITDA = Total Debt / EBITDA
Where:
- Total Debt is the sum of a company's short-term and long-term debt obligations.
- EBITDA is a non-GAAP metric that represents a company's operating performance, calculated by adding back interest, taxes, depreciation, and amortization to net income.
A high Debt-to-EBITDA ratio can indicate that a company has more debt than it can handle, which may lead to financial distress. Lenders and investors often use this ratio to evaluate a company's creditworthiness and assess its ability to service its debt12.
8/27/2024 09:29pm
