Debt Service Coverage Ratio (DSCR)
The debt service coverage ratio is for corporate, government and personal finance. Whether it is corporate, government or personal finance, the debt service coverage ratio shows the ability to fulfill debt obligations. As a result, it shows investors if the company has enough income to pay the debts. Debt service ratio calculates the net operating income and divide it by total debt service, including principal and interest payments on loan.
Key Features
- Measures the available cash flow to pay the debt amount.
- Only for corporate, government or personal finance.
- The minimum debt service ratio depends on macroeconomic conditions. If the economy is good, we may consider lower ratio.
