This DSCR calculator estimates the debt service coverage ratio which is the proportion of Net Operating Income against the total debt service of an organization. There is in depth information on the DSCR formula and some more information on this topic below the tool.


 

Annual Net Income:*
$
Expenses with interest:
$
Amortization & depreciation :
$
Other non-cash items:
$
Principal repayment value:*
$
Interest payments value:
$
Lease payments:
$

How does this DSCR calculator work?

The algorithm of this DSCR calculator applies the formula explained here that considers the following balance sheet figures:

  • Annual Net Income (ANI)

  • Expenses with interest (EWI).

  • Amortization & depreciation (AAD).

  • Other non-cash items (ONI).

  • Principal repayment value (PRV).

  • Interest payments value (IPV).

  • Lease payments (LPM).

Debt Service Coverage Ratio formula (DSCR) = (ANI + EWI + AAD + ONI) / (PRV + IPV + LPM)

The interpretation of the DSCR ratio level

  • If DSCR < 1 demonstrates the cash flow is negative which is a negative signal for the financial position of the company.

  • If DSCR > 1 indicates a positive cash flow, thus it is considered as a positive signal.

Example of a calculation

Let’s assume a factory with this situation:

  • Annual Net Income = $500,000

  • Expenses with interest = $50,000

  • Amortization & depreciation = $100,000

  • Other non-cash items = = $150,000

  • Principal repayment value = $250,000

  • Interest payments value (IPV) = $50,000

  • Lease payments (LPM) = $25,000

The debt service coverage ratio that results is 3.20 (or 320%).

01 Dec, 2014 | 0 comments

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