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Debt Service Coverage Ratio

Net operating income / annual debt payments.

Inputs

Cash available for debt (EBITDA build-up)

= $233,000.00

Net Income + Interest + Taxes + Depreciation + Amortization. Hover the info icon on any box for its exact source.

Bottom-line profit after all expenses, interest, and taxes.

$
Source: Income Statement

Interest paid on all business debt during the period.

$
Source: Income Statement

Federal, state, and local income taxes paid or accrued.

$
Source: Income Statement

Non-cash expense for wear on fixed assets (equipment, buildings).

$
Source: Income Statement or Cash Flow Statement. Form 4562, Sch. C line 13.

Non-cash expense for intangibles (goodwill, patents, software).

$
Source: Cash Flow Statement

Annual debt service

= $105,000.00

Principal + Interest + Capital leases + Other required payments over the next 12 months.

Total principal paid on all business loans in the year.

$
Source: Loan amortization schedules

Interest portion of loan payments (same figure as above; included here for total debt service).

$
Source: Amortization schedules

Annual payments on capitalized equipment or real-estate leases.

$
Source: Lease schedules; Balance Sheet 'Capital Lease Obligations'.

Lines of credit minimums, subordinated debt, seller notes, etc.

$
Source: Loan agreements, LOC statements, promissory notes.

Results

DSCR
2.22x
EBITDA ÷ Total Debt Service
Assessment
Strong (≥ 1.25)
EBITDA (cash available)
$233,000.00
Total annual debt service
$105,000.00
Cushion / (shortfall)
$128,000.00
Lender rule of thumb: most banks require DSCR ≥ 1.25x for commercial and SBA loans. Below 1.00x means cash flow doesn't cover payments.
EBITDA composition
Debt service breakdown

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