Its very difficult to have a set ratio as safe levels vary from industry to industry and even from business to business within an industry.
I own one asx listed business in particular that will have a ebitda to debt ratio of around 1 when it reports full year profits. It also has massive intangible assets and negative NTA, but i am not concerned as the business as an excellent track record of making acquistions, integrating them quickly and paying debt back quickly. At the first sign of revenues slowing i would be selling it though
I think the point is that all debt is bad if the revenues and profits are declining. Who would have thought a few years ago that people would be querying MYR debt levels.
If you are after a default risk indicator model then i suggest you google Altman Z score. This formulae has a good sucess rate a predicting a liquidity event for companies up to 2 years out. Not sure if it would have worked with RFG though
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