Shows how many years of EBITDA it would take to repay all net debt — the primary leverage metric used by lenders.
Formula: Net Debt / EBITDA = (Total Debt − Cash) / EBITDA
How to read it: < 1.5× = low leverage (Good) · 1.5–3× = moderate · > 3× = high. Lender covenants are often set around 3–4×. Only defined for positive EBITDA: with negative EBITDA the ratio is null, and net debt plus negative EBITDA is rated Bad — never "net cash".
The standard leverage covenant in leveraged buyouts and corporate credit agreements. Ratios above 4× typically trigger credit downgrades or covenant breaches.