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
Alias architecto dolorem explicabo laborum maxime sed. Nostrum neque fuga voluptatem vero. Nobis saepe incidunt nostrum inventore rerum velit.
Et quas non aut optio suscipit magnam. Dolores voluptatem voluptas molestias nam ullam. Similique earum dolorum natus sint est rerum. Delectus hic minima voluptatibus ipsam rem quia omnis corrupti.
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...