What is Senior Debt Ratio?
Senior Debt Ratio provides insight into the proportion of a company's assets that are financed through senior debt, which typically carries lower interest rates but has higher priority in repayment compared to other forms of debt.
A higher Senior Debt Ratio indicates that a larger portion of the company's assets is financed through senior debt, which could potentially increase financial risk. Conversely, a lower ratio suggests that the company relies less on senior debt financing, which may indicate a stronger financial position.
Financial analysts and investors use the Senior Debt Ratio to assess a company's capital structure and debt repayment capacity. A high ratio may signal that the company is heavily leveraged, which could increase the risk of default, especially if the company faces financial challenges or economic downturns. On the other hand, a low ratio may indicate a conservative capital structure with less financial risk.
How to Calculate Senior Debt Ratio?
Senior Debt Ratio calculator uses Senior Debt Ratio = Senior Debt/EBIT and Depreciation and Amortization to calculate the Senior Debt Ratio, The Senior Debt Ratio is a financial metric that evaluates a company's financial leverage by comparing its senior debt to its total assets. Senior Debt Ratio is denoted by SDR symbol.
How to calculate Senior Debt Ratio using this online calculator? To use this online calculator for Senior Debt Ratio, enter Senior Debt (SD) & EBIT and Depreciation and Amortization (EBITDA) and hit the calculate button. Here is how the Senior Debt Ratio calculation can be explained with given input values -> 2.375 = 950000/400000.