IntegrityAccrual#72
Net Debt to EBITDA expresses the reliability of reported earnings versus underlying cash flow.
By Javier Sanz, Founder & Lead AnalystEditorially reviewed
Last updated: Reviewed by: Javier Sanz
Formula
Operating Cash Flow / Net Income
Description
Compares operating cash flow to net income to assess earnings quality. The Piotroski F-Score awards a point when operating cash flow exceeds net income. Low accrual ratios can indicate that earnings are being inflated by aggressive accounting rather than real cash generation.
Interpretation
Above 1.0 means cash flow exceeds reported earnings, a positive quality signal. Below 0.8 consistently warrants investigation into the gap. One of the nine criteria in the Piotroski F-Score.
Related metrics: Debt-to-Equity Ratio (D/E). (Updated 2026)
Further Reading
- SEC EDGAR primary filings on Net Debt to EBITDA (Net Debt/EBITDA)- Primary source filings used to calculate Net Debt to EBITDA (Net Debt/EBITDA).
FAQ
How is Net Debt to EBITDA calculated?+
Net Debt to EBITDA uses the formula: Operating Cash Flow / Net Income. compare against sector median on /screener with the Sector filter applied. ValueMarkers refreshes the calculation within 24 hours of each new SEC filing using SEC EDGAR 10-K cash-flow reconciliation + footnote disclosures.
What is a good Net Debt to EBITDA value by sector?+
There is no single 'good' value for Net Debt to EBITDA — context is sector-driven. compare against sector median on /screener with the Sector filter applied. The /screener exposes sector-relative percentiles for Net Debt to EBITDA on every ticker, so you can compare against the sector median rather than the broad-market median.
Which investors use Net Debt to EBITDA?+
James Chanos, Carson Block, forensic-accounting analysts cite Net Debt to EBITDA as a key input to to detect earnings manipulation and accruals inflation. The academic anchor is Beneish (1999) and Sloan (1996) accruals research. ValueMarkers weights this within the Integrity pillar of the VMCI score (15% of total).
What are the limitations of Net Debt to EBITDA?+
Net Debt to EBITDA can mislead in false positives in fast-growing or restructuring companies. Pair Net Debt to EBITDA with at least two cross-checks from other VMCI pillars — for example, free cash flow trend, balance-sheet quality, and earnings consistency — before drawing a single-metric conclusion.
Where can I see live Net Debt to EBITDA data?+
Visit any /stock/[ticker] page on ValueMarkers to see live Net Debt to EBITDA data, sector percentiles, and the VMCI composite score that integrates Net Debt to EBITDA with 119 other indicators across 100,000+ stocks. The free /screener exposes Net Debt to EBITDA as a filterable column.
Used in these guides
Related Integrity Indicators
Debt-to-Equity Ratio (D/E)OCF/Debt
Debt-to-Equity Ratio expresses the reliability of reported earnings versus underlying cash flow.
Debt-to-Assets RatioFCF Conv
Debt-to-Assets Ratio measures the reliability of reported earnings versus underlying cash flow.
Current RatioCapEx/Rev
Current Ratio measures the reliability of reported earnings versus underlying cash flow.
Quick RatioCapEx/OCF
Quick Ratio is the metric used to the reliability of reported earnings versus underlying cash flow.
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