Finance Formulas / July 18, 2018 / Chanel Cleveland
This ratio measures the financial leverage of a company. Companies with higher levels of liabilities compared with assets are considered highly leveraged and more risky for lenders.
EBITDA is a non-GAAP financial figure that measures a company's profitability before deductions that are considered somewhat superfluous to the business decision-making process. These deductions are interest, taxes, depreciation and amortization, all of which are not part of a company's operating costs and are therefore not associated with the maintenance and administration of a business on a day-to-day basis.
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