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The debt service coverage ratio (DSCR), also known as "debt coverage ratio" (DCR), is a financial metric used to assess an entity's ability to generate enough cash to cover its debt service obligations, such as interest, principal, and lease payments. The DSCR is calculated by dividing the operating income by the total amount of debt service due.
Debt-service coverage ratio (DSCR) looks at a company's cash flow versus its debts. The ratio is used when gauging a business's ability to pay off current loans and take on future financing.
The Loan life cover ratio (LLCR), similarly is the ratio of the net present value of the cash flow over the scheduled life of the loan to the outstanding debt balance in the period. Other ratios of this sort include: Cash flow available for debt service [clarification needed] Drawdown cover ratio; Historic debt service cover ratio
The ratio is defined as: Net Present Value of Cashflow Available for Debt Service ("CFADS") / Outstanding Debt in the period. Financial modelling of LLCR is now a standard metric calculated in a project finance model and has been standardized to a large extent [ 1 ] but always needs to be aligned with local practice of the financiers as ...
For this example, divide your monthly debt payments ($2,400) by your total monthly gross income ($6,000). In this case, your total DTI would be 0.40, or 40 percent. To confirm your number, use a ...
For example, the debt-to-equity ratio and interest coverage ratios are supplemental ways to see how leveraged a company is. Remember that a high debt-to-assets ratio isn’t necessarily a bad thing.
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