Net Debt to EBITDA Ratio
Calculates the net debt to EBITDA ratio, which measures the net debt of the company relative to its EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
The net debt to EBITDA ratio is a measure of a company’s ability to manage its debt obligations in relation to its earnings and cash flow. A lower ratio indicates better financial health and a stronger ability to manage debt.
The formula is as follows:
\[\text{Net Debt to EBITDA Ratio} = \text{Net Debt} / \text{EBITDA}\]Net debt to EBITDA is the leverage measure lenders, rating agencies and loan covenants use most: it reads as the number of years of EBITDA needed to repay the debt net of cash. What counts as high depends on how stable the earnings are, so utilities and telecoms carry more than cyclical companies. A negative value means the company holds more cash than debt, and the ratio becomes meaningless when EBITDA is close to zero or negative.
Net Debt to EBITDA Ratio in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_net_debt_to_ebitda_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["VZ", "TMUS", "CHTR"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_net_debt_to_ebitda_ratio()
Or, after setting up the Finance Toolkit MCP, ask:
What was the net debt to EBITDA ratio of Verizon, T-Mobile US and Charter Communications from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| CHTR | 4.5163 | 4.5991 | 4.5983 | 4.3482 | 4.3822 |
| TMUS | 4.3904 | 5.3127 | 4.0131 | 3.524 | 3.6175 |
| VZ | 3.6331 | 3.6523 | 3.7214 | 3.3851 | 3.8134 |
Parameters
get_net_debt_to_ebitda_ratio accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (income and cash flow statement items) over, with balance sheet items averaged over the same number of period ends. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses single-period flows (per quarter and not annualized with quarterly data). | 4 |