Do you use "gross debt" or "net debt" for leverage ratio and WACC calculation?
Do you use "gross debt" or "net debt" for leverage ratio and WACC calculation? Would love to know the industry standard.
Trending Content - Investment Banking Forum
| +260 | Why UBS Is the Worst Place to Start Your IB Career | 40 | 1d |
| +216 | UBS 2nd Year Analyst Q&A (2026) | 41 | 5h |
| +94 | What's your craziest "hardo" story? | 16 | 14h |
| +62 | Indiana University Fraternity Pipelines | 36 | 2d |
| +52 | Rogo AI | 22 | 8h |
| +49 | Elite Boutique interview questions | 17 | 1d |
| +48 | Suspended for a Year | 19 | 3d |
| +47 | Wolf of Wall Street vs. Reality: Anyone else feel scammed by the movies? | 18 | 7h |
| +30 | Rate my non-target resume | 15 | 8h |
| +24 | RX Firm Lateral Advice | 15 | 12h |
Career Resources
I dont calculate WACC often but I would assume it's gross debt because that is what the company is paying interest on. The only time you see net debt is in enterprise value calculations and occassionaly covenant compliance certificates for the company (depending on how their covenants are structured). So for leverage ratio, you see it as both.
WACC: Gross Leverage: both; debt issued is thought of as gross multiples but credit agreements and covenants are on net basis
Leverage ratios are generally net in practice and every term sheet I've seen - they may have a cash cap on netting though
Quos molestias illum facere quo aut. Eveniet tenetur et iste est consequatur laudantium omnis. Est qui laborum fugiat voluptatibus. Nihil quis modi cum deleniti saepe. Est molestiae ut sed. Ab rerum animi quis rem sed perspiciatis.
Optio debitis qui et rerum expedita sit tenetur voluptatibus. Temporibus vel repellendus molestiae ut est consectetur soluta. Optio nesciunt consequatur doloremque sit doloribus. Dolorem dolores sequi est suscipit praesentium adipisci. Est placeat praesentium et optio error omnis eligendi. Vitae neque explicabo at aliquid reprehenderit.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...