Gross & Net Debt to EBITDA Calculator
Calculate gross and net leverage (debt-to-EBITDA) from your own figures. Uses the covenant EBITDA you enter. Eligible cash is subtracted only if it qualifies under your agreement.
Inputs
All figures in the same currency. No conversion is performed.
Use only if your definition prevents net debt below zero.
Leverage is shown as N/M because Covenant EBITDA is zero or negative — division is not meaningful.
Methodology
- Net debt
- Gross debt − eligible / qualifying cash. Only cash that qualifies under your covenant definition may be deducted — not all balance-sheet cash necessarily qualifies.
- Gross leverage
- Gross debt ÷ covenant EBITDA, expressed as a multiple (e.g. 4.10x).
- Net leverage
- Net debt ÷ covenant EBITDA.
- Not meaningful (N/M)
- When covenant EBITDA is zero or negative, leverage is not meaningful and is shown as N/M rather than a spurious value.
Worked example
Using the example scenario:
- Gross debt: £4,600,000
- Eligible cash: £500,000
- Covenant EBITDA: £1,000,000
- Net debt = £4,100,000
- Net leverage = 4.10x · Gross leverage = 4.60x
Interpretation & limitations
Lower leverage generally means more headroom against a maximum-leverage covenant. This calculator uses the figures you enter — it does not define what counts as debt, cash or EBITDA under your agreement. Covenant definitions of Debt and Cash can differ materially between credit agreements. Refer to your finance documents for the definitions that apply.
Related tools
Your financial data stays on your device. Calculations run entirely in your browser. Nothing is uploaded or saved.
Understanding net leverage
Net leverage measures net debt relative to EBITDA and is commonly used to assess the relationship between a company's indebtedness and its operating earnings. A higher ratio indicates more debt relative to EBITDA, while a lower ratio generally indicates lower financial leverage.
In covenant analysis, net leverage may be tested against a maximum permitted ratio. The difference between the calculated leverage ratio and the applicable threshold helps indicate the amount of covenant headroom available.
Gross leverage vs net leverage
Gross leverage uses total qualifying debt without deducting cash, while net leverage deducts eligible or qualifying cash from debt before dividing by covenant EBITDA. The resulting ratios can therefore differ significantly where a borrower holds substantial cash.
The relevant treatment of debt, cash and EBITDA is determined by the applicable finance agreement. Cash shown on the balance sheet may not necessarily qualify for deduction when calculating net debt for covenant purposes.