Debt service coverage ratio: Difference between revisions

Revision as of 05:22, 20 October 2022

Revision as of 10:21, 3 December 2022

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:{{math|Adj. EBITDA {{=}} (Gross Operating Revenue) − (Operating Expenses)}}

:{{math|Debt Service {{=}} (Principal Repayment) + (Interest Payments) + (Lease Payments)}}<ref>{{Cite web|url=https://propertymetrics.com/blog/how-to-calculate-the-debt-service-coverage-ratio-dscr/|title=How to Calculate the Debt Service Coverage Ratio (DSCR)|date=17 February 2016 }}</ref>

To calculate an entity's debt coverage ratio, you first need to determine the entity's [[net operating income]] (NOI). NOI is the difference between gross revenue and operating expenses. NOI is meant to reflect the true income of an entity or an operation without or before financing. Thus, not included in operating expenses are financing costs (e.g. interests from loans), personal income tax of owners/investors, capital expenditure and depreciation.