## What is a good 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 is a healthy debt to EBITDA ratio by industry?**

In some industries, a debt/EBITDA of 10 could be completely normal, while in other industries a ratio of three to four is more appropriate.

**What is a good net debt to equity ratio?**

What is a good debt-to-equity ratio? Although it varies from industry to industry, a debt-to-equity ratio of around 2 or 2.5 is generally considered good. This ratio tells us that for every dollar invested in the company, about 66 cents come from debt, while the other 33 cents come from the company’s equity.

### What does a negative debt to EBITDA ratio mean?

If EBITDA is negative, the ratio of corporate debt to EBITDA will fall under zero, where the deeper the ratio falls under zero, the worse will be corporate credit quality. Thus, the ratio of corporate debt to EBITDA is a non-monotonic relationship.

**Is a low net debt EBITDA good?**

Generally, a net debt to EBITDA ratio above 4 or 5 is considered high and is seen as a red flag that causes concern for rating agencies, investors, creditors, and analysts. However, the ratio varies significantly between industries, as each industry differs greatly in capital requirements.

**What is a good net leverage?**

The optimal debt-to-equity ratio will tend to vary widely by industry, but the general consensus is that it should not be above a level of 2.0. While some very large companies in fixed asset-heavy industries (such as mining or manufacturing) may have ratios higher than 2, these are the exception rather than the rule.

#### What is net debt EBITDA?

The net debt-to-EBITDA (earnings before interest depreciation and amortization) ratio is a measurement of leverage, calculated as a company’s interest-bearing liabilities minus cash or cash equivalents, divided by its EBITDA.

**What is net debt ratio?**

Net Debt Ratio means a fraction where the numerator is an amount equal to Net Debt and the denominator is an amount equal to the sum of Net Debt plus Equity.

**What is a good net leverage ratio?**

In most cases, a particularly sound one will fall between 0.1 and 0.5. A ratio of 0.5 — an indication that a business has twice as many assets as it has liabilities — is considered to be on the higher boundary of desirable and relatively common.

## What is good EBITDA debt?

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.