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Leveraged Buyouts: A Practical Introductory Guide to LBOs by David Pilger

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Chapter 14: Additional Ratio Analysis

Ratios are a means of measuring a given company’s performance over different periods of time. Some ratios that are very common in leveraged buyout analysis include:

  • total debt to equity
  • total debt to capital
  • total debt to EBITDA
  • net debt to EBITDA
  • EBITDA to interest
  • EBIT to interest.

We will discuss each of these ratios and explain how to calculate them in our example model.

Before we dive into the calculations of our ratios we must first forecast any changes to shareholders’ equity. Let’s turn our attention to the shareholders’ analysis portion of our spreadsheet. We will calculate changes in shareholders’ equity by first establishing what our equity value would be in Year 0, at the point ...

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