What ratio measures a company’s ability to cover total debt obligations using annual EBITDA?
ADebt-to-EBITDA Ratio
BQuick Ratio
CCurrent Ratio
DReturn on Sales
Explanation
* Debt-to-EBITDA = Total Debt / Earnings Before Interest, Tax, Depreciation, and Amortization.
* Widely used leverage metric by credit rating agencies to assess payback leverage years.
* Higher ratio indicates elevated debt burden relative to earnings power.
Exam Relevance
- Topic: Financial Statement Analysis
- Subtopic: Leverage & Coverage
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