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No, it's the value of the loan to the enterprise value of the company. So if you provide a loan at 4.0x leverage for a business that was bought at 15.0x, LTV would 27.7%. Conversely if the company was valued at 10.0x, then LTV would be 40.0%.
turns on leverage would be --> LTV/ (1-LTV) so 0.75/0.25 = 3 --> so yes 75% would be 3 turns of leverage
Philosophically, it’s two different concepts. Yes it is 3 turns based on D/E ratio, but as far as I know, people working in credit usually refer to debt/ebitda as a turn.
So 3 turn is quite low from an EBITDA leverage standpoint, but it’s a different story if it’s DE
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