Debt service coverage ratio: Difference between revisions

Revision as of 18:44, 4 May 2018

Revision as of 02:32, 18 January 2019

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The '''debt service coverage ratio''' ('''DSCR'''), also known as "debt coverage ratio" (DCR), is the ratio of cash available forto debt servicing tofor interest, principal and lease payments. It is a popular [[Benchmarking|benchmark]] used in the measurement of an entity's (person or corporation) ability to produce enough cash to cover its debt (including lease) payments. The higher this ratio is, the easier it is to obtain a loan. The phrase is also used in commercial banking and may be expressed as a minimum ratio that is acceptable to a lender; it may be a loan condition. Breaching a DSCR covenant can, in some circumstances, be an act of [[Default (finance)|default]].

==Uses==