Q:

What is funded debt to EBITDA ratio?

A:

The funded debt to EBITDA ratio is calculated by looking at the funded debt and dividing it by the earnings before interest, taxes, depreciation and amortization. Funded debt is long-term debt financed debt, such as bonds, that comes due in a longer time period than a year.

Know More

Full Answer

The ratio measures the company's ability to pay off its long-term funded debt. A high ratio shows it takes longer for the company to pay off the funded debt; a lower rate conversely shows the company may take on more funded debt. A high ratio can lower a company's credit rating. By looking at the funded debt only, the ratio looks at the long term, and may exclude short-term projects funded by debt.

Learn more in Accounting

Related Questions

  • Q:

    How do I calculate average total assets?

    A:

    Average total assets are calculated by adding together the value of assets at the beginning and end of an accounting period and dividing the sum by two, according to TheFreeDictionary. An accounting period is defined as the period of time reflected in the financial statements of businesses, usually a quarter or a year.

    Full Answer >
    Filed Under:
  • Q:

    What is the sales turnover formula?

    A:

    Sales are calculated by multiplying the units sold by the price. Sales turnover is the summation of all sales made within a year. It includes both credit and cash sales.

    Full Answer >
    Filed Under:
  • Q:

    What is the formula for finding the variable cost ratio?

    A:

    There are two formulas for calculating variable cost ratio. The first formula is: TVC ÷ TS = VCR. TVC is total variable costs, TS is total sales and VCR is variable cost ratio. Here's an example with numbers: $2000 ÷ $10000 = 0.2. The variable cost ratio is 20 percent.

    Full Answer >
    Filed Under:
  • Q:

    What is the debt coverage ratio?

    A:

    The debt coverage ratio is a measure of the ability of an entity to generate income to cover its debts, and it is calculated by dividing the net operating income by the debt service. The ratio is used by internal groups and financial institutions to determine the viability of lending.

    Full Answer >
    Filed Under:

Explore