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Why would the amount of debt/EBITDA be an important ratio when examining the problem of high...

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Finance

Why would the amount of debt/EBITDA be an important ratio whenexamining the problem of high debt, particularly with respect tothe leveraged loans? Why might debt/equity or debt/assets be lessappropriate? Are there other ratios that would also be helpful topotential investors when examining a company’s debt situation orprior to investing in this debt?

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The debt to EBITDA ratio is a measure to ascertain the capability of a firm to produce enough income from its operations to pay back its debt If debt is compared with any other measure of income like net profit and gross profit it will not reflect the true capability of the company to pay back its debt The money    See Answer
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Why would the amount of debt/EBITDA be an important ratio whenexamining the problem of high debt, particularly with respect tothe leveraged loans? Why might debt/equity or debt/assets be lessappropriate? Are there other ratios that would also be helpful topotential investors when examining a company’s debt situation orprior to investing in this debt?

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