Leverage Ratios
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Term
Main definition
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Measurements (expressed as ratios) of a company's indebtedness as compared to its cash flow or some other similar financial metric. Typical leverage ratios include Total Debt-to-EBITDA (which would measure the leverage as a ratio of debt to cash flow), Senior Debt-to-EDITDA (which would measure the leverage as a ratio of senior debt to cash flow), or Total Debt-to-(EBITDA minus Capital Expenditures) (a measurement of leverage as a ratio of the debt to the cash flow net after capital expenditures. The requirements imposed by key financial covenants in credit facilities and debt securities often include maximum leverage ratios, among many other things.
