Net Debt to EBITDA Calculator

How it is calculated

The tool first computes net debt, then divides it by EBITDA: net debt = total debt − cash and ratio = net debt / EBITDA. All three amounts must be in the same currency and EBITDA should be for the same period, usually the last twelve months. Cash is optional: if left empty it is treated as 0, so the result is gross debt over EBITDA. Debt and cash cannot be negative, and EBITDA must be above zero, otherwise nothing is shown. If cash exceeds debt the net debt and the ratio turn negative, meaning a net cash position. The ratio is shown with two decimals as a multiple (x).

Common mistakes

• Using net income or operating profit instead of EBITDA; the ratio is defined on EBITDA and gives a different value otherwise.
• Using a single quarter's EBITDA against full-year debt, which makes leverage look about four times worse.
• Leaving out cash and equivalents and then comparing the gross-debt result to a net-debt covenant.
• Entering a negative EBITDA to see the ratio; the tool shows nothing for it, since a multiple is not meaningful for a loss-making year.
• Entering debt as a negative number; debt is entered as a positive amount.