Debt & Financial Stability
Borrowing, coverage of interest, and the cash buffer against near-term bills. 17 topics.
Debt-to-Equity Ratio
Interest-bearing debt divided by shareholders' equity. It measures how much of the funding comes from lenders rather than owners.
Debt-to-Asset Ratio
Debt as a share of total assets.
Net Debt
Borrowings minus cash and cash equivalents. The debt that would remain if surplus cash were used to repay it.
Gross Debt
All interest-bearing borrowings, before subtracting cash.
Net Debt-to-EBITDA
Net debt divided by EBITDA. A rough count of how many years of current EBITDA would repay the net borrowings.
Interest Coverage Ratio
How many times operating profit covers the interest bill.
Debt Service Coverage Ratio (DSCR)
Cash available for debt service divided by the principal and interest due.
Current Ratio
Current assets divided by current liabilities.
Quick Ratio
Current assets excluding inventory, divided by current liabilities. Also called the acid-test ratio.
Cash Ratio
Cash and equivalents divided by current liabilities.
Total Liabilities
Every recognised obligation: borrowings, payables, provisions, deferred tax, and other liabilities.
Long-Term Debt
Borrowings that are not due within the next year.
Short-Term Debt
Borrowings due within a year, including the current portion of long-term loans and working-capital facilities.
Financial Leverage
The use of borrowed money to fund assets, so that returns and losses to equity are magnified.
Gearing Ratio
Another name for the weight of debt in the capital structure. Definitions vary, so the formula has to be stated.
Solvency Ratio
A measure of whether assets, or a defined capital base, can cover obligations over the long term. The formula depends on the context.
Fixed Charge Coverage Ratio
Earnings available to cover interest plus other fixed charges, such as lease payments, divided by those charges.