EBITDA can fall 80 per cent before the first covenant breaches
Covenant Headroom Calculator
Leverage and interest cover, tested against your facility’s limits, and the EBITDA floor beneath both. Know the number while it is still comfortable.
Covenant Headroom Calculator
Where you sit against leverage and interest cover, and the EBITDA fall that breaches. Know the floor before the lender reminds you of it.
The conventions this uses
Leverage is net debt over EBITDA, and net debt is drawn debt less cash. The undrawn part of a facility is headroom you can ask for, not negative debt.
Interest cover is EBITDA over interest. Both tests usually run on adjusted EBITDA as defined in the facility agreement, which is rarely the number in your accounts.
A breach is an event of default even when the loan is being serviced perfectly. The time to know the floor is while you are comfortably above it.
Take the workbook
Both tests in Excel with the EBITDA floor named, and the fall in percentage terms that reaches it.
Download the workbookFAQs
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