Q:

What is funded debt to EBITDA ratio?

A:

Quick Answer

The funded debt to EBITDA ratio is calculated by looking at the funded debt and dividing it by the earnings before interest, taxes, depreciation and amortization. Funded debt is long-term debt financed debt, such as bonds, that comes due in a longer time period than a year.

Continue Reading

Full Answer

The ratio measures the company's ability to pay off its long-term funded debt. A high ratio shows it takes longer for the company to pay off the funded debt; a lower rate conversely shows the company may take on more funded debt. A high ratio can lower a company's credit rating. By looking at the funded debt only, the ratio looks at the long term, and may exclude short-term projects funded by debt.

Learn more about Accounting

Related Questions

  • Q:

    Why is deflation bad for the economy?

    A:

    Deflation is bad for the economy because it causes delayed spending, nominal wage cuts, higher interest rates and a higher burden of debt ratio. Deflation is the opposite of inflation and generally causes prices to go down after a recession.

    Full Answer >
    Filed Under:
  • Q:

    What is car depreciation?

    A:

    Car depreciation is the difference between the amount paid for a car and its current value. It is often the biggest expense involved in car ownership.

    Full Answer >
    Filed Under:
  • Q:

    What are some of the depreciation methods in accounting?

    A:

    Straight-line and activity, or unit of production, depreciation are some of the methods by which accountants calculate depreciation, notes SFGate. Business owners use depreciation of tangible assets such as computers, machinery or vehicles to spread out their costs and to gain insight into the financial health of their companies.

    Full Answer >
    Filed Under:
  • Q:

    What is the formula for depreciation rate?

    A:

    There are three commonly used formulas for depreciation based on time: declining balance method, straight line method and sum-of-the-years'-digits method. The first formula calculates book value multiplied by depreciation rate; the book value equals cost minus accumulated depreciation. To calculate the depreciation rate for a double declining balance, use straight line depreciation rate multiplied by 200 percent. Likewise, for a 150 percent declining balance, use straight line depreciation rate multiplied by 150 percent.

    Full Answer >
    Filed Under:

Explore