What is another term for the debt/EBITDA ratio?

The correct answer highlights that the debt/EBITDA ratio is commonly referred to in finance as a measure of a company's financial leverage. This ratio is particularly significant as it provides insight into the company's ability to manage and service its debt. Financial leverage illustrates the proportion of debt compared to earnings before interest, taxes, depreciation, and amortization (EBITDA), indicating how much debt a company has relative to its earnings.

In this context, the debt/EBITDA ratio is essential for assessing a company's risk profile, as higher leverage may suggest greater financial risk, while a lower ratio indicates a stronger ability to cover debt obligations. Investors and creditors often look at this ratio to evaluate the financial health of a business and its potential for growth or distress.

The term "yield per turn of leverage" does not accurately describe the debt/EBITDA ratio. Rather, it involves understanding how changes in leverage can affect returns, which is distinct from the debt/EBITDA calculation. Similarly, profit margin and asset turnover are financial metrics that illuminate different aspects of a business’s performance, such as profitability and efficiency, but do not relate to the relationship between debt and earnings.