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Debt Service Coverage Ratio Formula

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Debt Service Coverage Ratio measures if the income generated by a commercial property is sufficient to fulfill its annual debt burden. Check FAQs

DSCR = \frac{NOI}{AD}

DSCR - Debt Service Coverage Ratio?NOI - Net Operating Income?AD - Annual Debt?

Debt Service Coverage Ratio Example

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Here is how the Debt Service Coverage Ratio equation looks like with Values.

Here is how the Debt Service Coverage Ratio equation looks like with Units.

Here is how the Debt Service Coverage Ratio equation looks like.

1.8333 = \frac{550000}{300000}

1.8333 = \frac{550000}{300000}

1.8333 = \frac{550000}{300000}

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Debt Service Coverage Ratio Solution

Follow our step by step solution on how to calculate Debt Service Coverage Ratio?

FIRST Step Consider the formula

DSCR = \frac{NOI}{AD}

Next Step Substitute values of Variables

∴

DSCR = \frac{550000}{300000}

Next Step Prepare to Evaluate

∴

DSCR = \frac{550000}{300000}

Next Step Evaluate

∴

DSCR = 1.83333333333333

LAST Step Rounding Answer

∴

DSCR = 1.8333

Debt Service Coverage Ratio Formula Elements

Variables

Debt Service Coverage Ratio

Debt Service Coverage Ratio measures if the income generated by a commercial property is sufficient to fulfill its annual debt burden.

Symbol: DSCR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Debt Service Coverage Ratio

Net Operating Income

Net Operating Income is a key financial metric used in real estate investment analysis to evaluate the profitability of income-generating properties.

Symbol: NOI

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Net Operating Income

Annual Debt

Annual Debt refers to the total amount of debt obligations that a company or individual must pay over the course of a year.

Symbol: AD

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Annual Debt

Other formulas in Debt Management category

Go Senior Debt Ratio

SDR = \frac{SD}{EBITDA}

Go Mortgage Refinance Breakeven Point

MRBP = \frac{TLC}{MS}

Go Overhead Rate

OR = \frac{OC}{Rev}

Go Annual Debt Service

ADS = Pri. + Int.

How to Evaluate Debt Service Coverage Ratio?

Debt Service Coverage Ratio evaluator uses Debt Service Coverage Ratio = Net Operating Income/Annual Debt to evaluate the Debt Service Coverage Ratio, The Debt Service Coverage Ratio is a financial metric used by lenders and investors to evaluate the ability of a company to cover its debt obligations. Debt Service Coverage Ratio is denoted by DSCR symbol.

How to evaluate Debt Service Coverage Ratio using this online evaluator? To use this online evaluator for Debt Service Coverage Ratio, enter Net Operating Income (NOI) & Annual Debt (AD) and hit the calculate button.

FAQs on Debt Service Coverage Ratio

What is the formula to find Debt Service Coverage Ratio?

The formula of Debt Service Coverage Ratio is expressed as Debt Service Coverage Ratio = Net Operating Income/Annual Debt. Here is an example- 1.833333 = 550000/300000.

How to calculate Debt Service Coverage Ratio?

With Net Operating Income (NOI) & Annual Debt (AD) we can find Debt Service Coverage Ratio using the formula - Debt Service Coverage Ratio = Net Operating Income/Annual Debt.

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Debt Service Coverage Ratio Formula

Debt Service Coverage Ratio Example

Debt Service Coverage Ratio Solution

Debt Service Coverage Ratio Formula Elements

Other formulas in Debt Management category

How to Evaluate Debt Service Coverage Ratio?

FAQs on Debt Service Coverage Ratio

Variable Name