Communiquez avec les autres et partagez vos connaissances professionnelles

Inscrivez-vous ou connectez-vous pour rejoindre votre communauté professionnelle.

Suivre

What is DSCR? How it is calculated?

What is DSCR (Debt Service Coverage Ratio) and how it is calculated? 

user-image
Question ajoutée par Subash Thomas , Manager- Internal Audit. , Confidential Company
Date de publication: 2016/01/19
Darshana Prasad
par Darshana Prasad , Senior Manager - Assurance , Ernst & Young

Measure of the cash flows, available to pay current debt obligations.

 

EBIT (1-t)

Interest Cost

Rehan Qureshi
par Rehan Qureshi , Financial Consultant , Self Employeed

How to Calculate the Debt Service Coverage Ratio

In order to calculate the debt service coverage ratio, you need to know:

The net operating income (NOI) the business earned during the previous months (or whatever measure of cash flow the lender defined in the bank loan covenant)

The amount of principle, interest, and sometimes lease payments (Debt Service) paid to the lender and others for the previous months

Divide the NOI by the Debt Service and you will have a value which should be taken to the second decimal point.

For example, if a business NOI was $, and its Debt Service for the same period is,, then the Debt Service Coverage Ratio would be1. to1. ($, divided by,).  If the lender requires a debt service coverage ratio of1. to1.0, this business would exceed the requirement and be in compliance with its bank loan covenant.  If on the other hand, the debt service coverage ratio was less than1.0, then the borrowing business would be producing ‘negative cash flow’ which is not desirable.

georgei assi
par georgei assi , مدير حسابات , المجموعة السورية

1. The debt ratio = total liabilities / total assets are percentage and expresses the ratio of how the administration adopted on third party funds to finance asset structure

2. ownership ratio = total equity / total assets and be a percentage and reflect the ratio of how the administration adopted the angel funds and other reserves

In finance assets structure

3. The coverage ratio of total debt = total Asolo short-term / short-term liabilities total and be the number of times and reflect the extent of current assets to cover short-term commitments and that the capacity of less than one year

muhammaad Asim
par muhammaad Asim , Accountant - Receivable/Collection , EDCH (Business Unit of Etisalat)

company's ability to service its current debts by comparing its net operating income with its total debt service obligations.

DSCR = Net Operating Income / Total Debt Service

Dibey Thomas
par Dibey Thomas , Auditor , Talal Abu Ghazaleh & Co International

DSCR is the ratio calculated for identifying a company's ability to cover the current debt liabilty, i.e. the principal and interest. The formula is simple, calculate the net operating income (fund available for servicing the debt) and divide it by the current principal payment plus interest (Annually, to which such Net operating income corresponds).

DSCR= Net operating Income

               Principal + Interest

ZAKIR HUSAIN KHAN
par ZAKIR HUSAIN KHAN , Assistant Accountant , Technical Trading Company LLC

DSCR is the ratio calculated for identifying a company's ability to cover the current debt liabilty, i.e. the principal and interest.

DSCR= Net operating Income Principal + Interest

Mohammad Iqbal Abubaker
par Mohammad Iqbal Abubaker , Jahaca Pty Ltd - Accounts Administrator , Jahaca Pty Ltd - Accounts Administrator

To calculate the debt service coverage ratio, simply divide the net operating income (NOI) by the annual debt. What this example tells us is that the cash flow generated by the property will cover the new commercial loan payment by1.x. This is generally lower than most commercial mortgage lenders require.

More Questions Like This