What is an acceptable net debt-to-EBITDA ratio?

Generally, net debt-to-EBITDA ratios of less than 3 are considered acceptable. The lower the ratio, the higher the probability of the firm successfully paying off its debt. Ratios higher than 3 or 4 serve as “red flags” and indicate that the company may be financially distressed in the future.

What does net debt-to-EBITDA tell you?

The net debt-to-EBITDA ratio is a debt ratio that shows how many years it would take for a company to pay back its debt if net debt and EBITDA are held constant. When analysts look at the net debt-to-EBITDA ratio, they want to know how well a company can cover its debts.

How do you calculate government net debt?

INDICATOR METADATA Definition: Net debt is calculated as gross debt minus financial assets corresponding to debt instruments.

How is the net debt to EBITDA ratio calculated?

to determine the probability of a company defaulting on its debt. The Debt to EBITDA ratio formula is as follows: Net debt is calculated as short-term debt + long-term debt – cash and cash equivalents. EBITDA EBITDA or Earnings Before Interest, Tax, Depreciation, Amortization is a company’s profits before any of these net deductions are made.

What’s the difference between net debt and gross debt?

Gross debt, on the other hand, is simply the total of the book value of a company’s debt obligations. Net debt essentially tells you how much debt is left on the balance sheet if the company pays all its debt obligations with its existing cash balances.

What are the implications of General Government debt?

General government gross debt Public debt levels have significant implications for the stability of public finances and the economy as a whole.

What is the average government debt in the OECD?

In 2017, the government gross debt in OECD countries amounted to 110% of GDP on average. The average level of government gross debt level increased in OECD countries by 37.3 p.p. between 2007 and 2017.