Debt Service Coverage Ratio (DSCR) Calculator

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Debt Service Coverage Ratio (DSCR) Calculator

DSCR measures a company’s ability to service its debt obligations using its operating income. It is calculated as operating income divided by total debt service. More info →

Input

Enter EBITDA and debt obligations to calculate DSCR.

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How This Calculator Works

DSCR (Debt Service Coverage Ratio) shows how many times a business's operating earnings cover its yearly loan payments, both interest and principal. Lenders use it to judge whether a borrower can comfortably keep up with repayments.

The Formula

DSCR = EBITDA ÷ (Annual Interest + Annual Principal)

Annual Interest + Annual Principal = Total Debt Service

What Each Input Does

EBITDA / EBIT: The operating earnings available to pay lenders.
Annual Interest Obligation: Interest due on all loans in a year.
Annual Principal Repayment: Loan principal that must be repaid in a year.

Step by Step

Interest and principal are added to get total debt service.
EBITDA is divided by total debt service.
The ratio is shown to 2 decimals.

Reading the Result

Above 1.25 – comfortably covers debt payments.

1.00 to 1.25 – enough, but with little buffer.

Below 1.00 – earnings may not cover the payments.

A negative EBITDA gives a negative ratio, which is shown as not meaningful.

Quick Example

EBITDA 1,500,000, annual interest 400,000, annual principal 600,000. Total debt service is 1,000,000, so DSCR = 1,500,000 ÷ 1,000,000 = 1.50, which is comfortably above 1.25.