Compute debt-to-equity, debt-to-assets, and interest coverage to gauge financial leverage.
Debt / Assets
50%
Debt / Equity
?
Debt compared with owner or shareholder equity.
1x
Debt / EBITDA
?
Debt compared with annual operating earnings before depreciation and amortization.
4.2x
Interest Coverage
?
Operating earnings divided by interest expense, used to judge room to pay interest.
5x
Data view
Balance sheet leverage uses percentage-style structure ratios, while coverage and debt load are multiples. They are shown separately so the units do not blur together.
| Group | Metric | Value | Read |
|---|---|---|---|
| Balance sheet leverage | Debt / Assets | 50% | Share of assets financed by debt. |
| Balance sheet leverage | Debt / Equity | 1x | Debt carried for each dollar of equity. |
| Coverage and debt load | Debt / EBITDA | 4.2x | Debt compared with operating earnings proxy. |
| Coverage and debt load | Interest Coverage | 5x | EBIT available for each dollar of interest. |