What is DSCR and how do you calculate it?

Question

Accepted Answer

DSCR Ratio is Debt Service Coverage Ratio, a financial metric used to measure a company's ability to cover its debt obligations.

DSCR Ratio is calculated by dividing a company's operating income by its total debt service payments.
A DSCR Ratio of 1 or higher indicates that a company is generating enough income to cover its debt payments.
Lenders typically look for a DSCR Ratio of 1.25 or higher when evaluating a company's creditworthiness.

Accepted Answer

The debt service coverage ratio (DSCR) is a key measure of a company's ability to repay its loans, take on new financing and make dividend payments. It is one of three metrics used to measure debt capacity, along with the debt-to-equity ratio and the debt-to-total assets ratio.

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What is DSCR and how do you calculate it?

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