Series 79: 3.3.3. Debt/EBITDA Ratio

Taken from our Series 79 Online Guide

3.3.3. Debt/EBITDA Ratio

The debt/EBITDA ratio reflects the amount of debt as compared to earnings. Here, EBITDA is used as a proxy for cash flow and is used to determine, very roughly, the number of years of earnings required to pay off the company’s debt completely. The ratio is expressed as:

Example: A company has combined short- and long-

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