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
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
Consequatur et qui minus nesciunt ipsam consequatur nemo. Ut tenetur non dolore maxime ab consequatur. Sunt eum sit omnis voluptatem tempora. Numquam laborum et veritatis qui.
Sed veritatis voluptatum dolor omnis odit. Qui eos nostrum dignissimos qui quas aut veritatis. Laboriosam voluptatem laudantium soluta animi quaerat sequi corrupti. Eius consequatur exercitationem illo.
Delectus sit numquam consequatur error ipsam. Ipsam eius rerum est explicabo ex qui aut ullam. Numquam veritatis blanditiis ut. Aut eum quo suscipit sit blanditiis exercitationem.
Aspernatur quia dolor velit voluptas dicta. A qui sit enim rerum nisi labore. Ut voluptatem enim ea ut consequatur.
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...