# Net-Debt/EBITDA

`D18-F01-A05` · Fundamental Analysis and Valuation → Statement Ratios · archetype `record-transform` · difficulty 4/5 · verification **verified**

Full page: https://docs.thefintechbuilder.com/fundamental-analysis-and-valuation/statement-ratios/net-debt-ebitda/
Agent skill: `npx skills add IslamBaraka90/Fintech-Algorithms-Library` — https://docs.thefintechbuilder.com/guides/agent-skill/

## Install and import

```bash
npm install fintech-algorithms
```

```ts
import { netDebtToEbitda } from "fintech-algorithms/fundamental-analysis-and-valuation/statement-ratios/net-debt-ebitda";
```

## Signature

```ts
netDebtToEbitda(input)
```

Builds EBITDA by adding interest, income tax and depreciation and amortization back to net income, nets borrowings against cash under a declared lease policy, and divides net debt by EBITDA.

## Parameters

| Name | Type | Required | Notes |
| --- | --- | --- | --- |
| `input` | `{ net_income: number; interest_expense: number; income_tax_expense: number; depreciation_and_amortization: number; current_borrowings: number; noncurrent_borrowings: number; lease_liabilities: number; cash_and_cash_equivalents: number; include_lease_liabilities: boolean }` | yes | A plain object. `net_income`, `interest_expense`, `income_tax_expense` and `depreciation_and_amortization` are summed into EBITDA; `current_borrowings`, `noncurrent_borrowings` and — only when `include_lease_liabilities` is true — `lease_liabilities` are summed into gross debt, from which `cash_and_cash_equivalents` is subtracted. The eight numeric keys must be finite numbers and `include_lease_liabilities` must be a boolean. |

## Returns

`{ ebitda: number; gross_debt: number; net_debt: number; net_debt_to_ebitda: number | null; lease_policy: string; state: string; reason: string }`

`ebitda`, `gross_debt` and `net_debt` show the bridge and are always emitted, and `lease_policy` records the choice as `included` or `excluded`. `net_debt_to_ebitda` is net debt over EBITDA, or `null` when EBITDA is not positive — in that case `state` is `not-meaningful` and `reason` is `nonpositive-ebitda`. Otherwise `state` is `net-cash` when net debt is below zero and `net-debt` when it is not, with `reason` `net-debt-divided-by-ebitda`.

## Errors

- When any of the eight numeric inputs is not a finite number — throws RangeError
- When include_lease_liabilities is not a boolean — throws RangeError
- When interest_expense, depreciation_and_amortization, current_borrowings, noncurrent_borrowings, lease_liabilities or cash_and_cash_equivalents is negative — throws RangeError

## Complexity

Time `O(1)`, space `O(1)`.

## Worked example

This is the worked example published in the article, replayed by the test suite on every run. The output cannot drift.

### Input

`input`:

```json
{
  "net_income": 120,
  "interest_expense": 45,
  "income_tax_expense": 35,
  "depreciation_and_amortization": 80,
  "current_borrowings": 60,
  "noncurrent_borrowings": 600,
  "lease_liabilities": 90,
  "cash_and_cash_equivalents": 150,
  "include_lease_liabilities": true
}
```

### Call

```ts
netDebtToEbitda(input)
```

### Returns

object with 7 fields: ebitda, gross_debt, net_debt, net_debt_to_ebitda, lease_policy, state, reason

```json
{
  "ebitda": 280,
  "gross_debt": 750,
  "net_debt": 600,
  "net_debt_to_ebitda": 2.142857142857,
  "lease_policy": "included",
  "state": "net-debt",
  "reason": "net-debt-divided-by-ebitda"
}
```

## Other exports

`dupontDecomposition`, `roicCalculation`, `cashConversionCycle`, `interestCoverageRatio`, `commonSizeStatements`, `calculate`. Every module additionally exports `run` as an alias of its primary
function, and a `meta` object carrying its catalog id, domain, family, shape and article URL.

## Verification and provenance

Tier: **verified** (via input-expected).

The worked example below is the figure published in this algorithm's article, replayed and asserted by the test suite on every build. The arithmetic cannot drift without the build failing.

Both tiers guarantee the signature. Full explanation: https://docs.thefintechbuilder.com/guides/verification/

Generated from the docs.json payload shipped inside fintech-algorithms@0.13.0.
The signature and parameter list are checked against the compiled implementation at build time,
so a description that contradicts the code fails the build rather than reaching this file.

## Links

- Article (how it works, step by step): https://thefintechbuilder.com/fundamental-analysis-and-valuation/statement-ratios/net-debt-ebitda/
- Implementation source: https://github.com/IslamBaraka90/Fintech-Algorithms-Library/blob/main/src/fundamental-analysis-and-valuation/statement-ratios/net-debt-ebitda/impl.ts
- Package on npm: https://www.npmjs.com/package/fintech-algorithms
- Domain index for agents: https://docs.thefintechbuilder.com/fundamental-analysis-and-valuation/llms.txt