This indicator measures in percentage terms the company's income capacity to repay its financing through operating income generation (Ebit). The value is the ratio of operating income (Ebit) divided to total financial debt minus shareholders’ financing. It is also called loan to value. 

 

LOAN TO VALUE FORMULA: EBIT / (FINANCIAL DEBTS - SHAREHOLDING FINANCING)

 

It is used by creditors of financial sources to monitoring the company's ability to satisfy long term debt financing as it becomes due so that can be a solvency warning cover ratio as the solvency depends on the earnings power of the company and in the long run any company cannot satisfy its debts unless it earns a profitable income generated by it business activity.

Studio Lupini srl
Via Don Rosmini, 4
21052 Busto Arsizio (VA) IT
MAIL: info@studiolupini.it
VAT:  IT 03611190129
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