DSCR calculator
DSCR is a leverage and coverage metric, calculated as Cash available for debt service ÷ Debt service (interest + scheduled principal). Common covenant. Real estate uses net operating income; corporate loans usually EBITDA less capex and cash taxes — the credit agreement defines it.
- Formula
- Cash available for debt service ÷ Debt service (interest + scheduled principal)
Debt service coverage ratio (DSCR)
DSCR = Cash available for debt service ÷ (Interest + Scheduled principal)$
Often EBITDA less unfinanced capex and cash taxes.
$
$
DSCR
1.50×
How it’s worked out
- 1Debt service$180,000 + $420,000$600,000
- 2Cash available ÷ debt service$900,000 ÷ $600,0001.50×
Runs in your browser; nothing you type is sent anywhere. Amounts in US dollars.
How to read it
The debt service coverage ratio compares the cash available to service debt with what the debt actually demands this period — interest and principal.
Loan agreements define 'cash available' precisely; use their definition, not a generic one.
Common mistakes
- Leaving principal out of debt service.
- Using EBITDA without deducting the capex and taxes the loan agreement requires.
Questions
- What DSCR do lenders require?
- Lenders commonly require 1.25× or more. Below 1.0× the business does not generate enough cash to make its scheduled payments.
- How is DSCR different from interest coverage?
- Interest coverage counts only interest. DSCR adds scheduled principal, which is why it is the stricter test for amortizing loans.
Read it with
The metrics read alongside this one, and the terms it is confused with.
- Interest coverage calculatorInterest coverage is a leverage and coverage metric, calculated as EBIT ÷ Interest expense.Calculator
- Net debt to EBITDA calculatorLeverage ratio is a leverage and coverage metric, calculated as Net debt ÷ EBITDA (or total debt ÷ EBITDA).Calculator
- Free cash flow calculatorFree cash flow is a cash and runway metric, calculated as Operating cash flow − Capital expenditures.Calculator
- DSCRDSCR is a leverage and coverage metric, calculated as Cash available for debt service ÷ Debt service (interest + scheduled principal).Term
The formula is the one the glossary states, and the arithmetic is unit-tested. A ratio with nothing to divide by shows a dash — undefined is not zero. General information, not financial advice.