easy · Corporate Credit Analysis fsa

In the context of the Debt / EBITDA ratio, what does the resulting multiple typically represent to a lender?

1. The amount of interest expense the firm can cover with its annual operating profit.
2. The percentage of assets currently financed by creditors rather than equity holders.
3. The theoretical number of years required to repay total debt if all EBITDA were dedicated to debt reduction.
4. The market value of the company relative to its total indebtedness.

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