Ratio Test

Definition:

A calculation used to assess the debt levels of a company so as to prevent it from taking certain actions (e.g., paying dividends or incurring more debt). A Ratio Test builds in an amount of protection to the bondholder(s)/lender(s). It is often an EBITDA to Fixed Charges Ratio-based debt incurrence test.

Return to Glossary

Your complete M&A platform

Datasite provides you one end-to-end platform that supports you across all stages of the deal.