To calculate the Debt Service Coverage Ratio (DSCR):
\[ DSCR = \frac{NOI}{DS} \]
Where:
The Debt Service Coverage Ratio (DSCR) is a measure used to determine the ability of a company to service its debt with its operating income. It is calculated by dividing the net operating income (NOI) by the debt service (DS). A DSCR of less than 1 indicates that the company does not generate enough income to cover its debt obligations, while a DSCR greater than 1 indicates that the company generates more income than necessary to cover its debt obligations.
Let's assume the following values:
Using the formula:
\[ DSCR = \frac{120000}{100000} = 1.20 \]
The Debt Service Coverage Ratio (DSCR) is 1.20.
Let's assume the following values:
Using the formula:
\[ DSCR = \frac{90000}{110000} \approx 0.82 \]
The Debt Service Coverage Ratio (DSCR) is approximately 0.82.
