Debt Yield Ratio Calculator

Formula

The formula to calculate the Debt Yield Ratio (DYR) is:

$DYR = \frac{NOI}{LA}$

Where:

$DYR$ is the Debt Yield Ratio
$NOI$ is the Net Operating Income
$LA$ is the Loan Amount

What is a Debt Yield Ratio?

The Debt Yield Ratio is a financial metric used in commercial real estate to assess the risk of a loan. It is calculated by dividing the net operating income (NOI) of a property by the loan amount. A higher debt yield ratio indicates a lower risk for lenders, as it suggests that the property generates sufficient income to cover the loan. This ratio is particularly useful for lenders to evaluate the potential return on investment and the financial stability of the property.

Extended information about "Debt-Yield-Ratio-Calculator"

Debt Yield Calculation

Definition: Debt yield is a measure used in real estate to assess the risk of a loan by comparing the property's net operating income to the loan amount.

Formula: $\text{Debt Yield} = \frac{\text{Net Operating Income}}{\text{Loan Amount}}$

$\text{Net Operating Income}$ : Income generated from the property after operating expenses
$\text{Loan Amount}$ : Total loan amount

Example: $\text{Debt Yield} = \frac{150,000}{1,500,000}$

Net Operating Income: 150,000
Loan Amount: 1,500,000

Debt Ratio Calculation

Definition: The debt ratio is a financial ratio that measures the extent of a company’s leverage.

Formula: $\text{Debt Ratio} = \frac{\text{Total Debt}}{\text{Total Assets}}$

$\text{Total Debt}$ : The sum of all short-term and long-term debts
$\text{Total Assets}$ : The total assets owned by the company

Example: $\text{Debt Ratio} = \frac{300,000}{1,000,000}$

Total Debt: 300,000
Total Assets: 1,000,000

Yield on Debt Formula

Definition: Yield on debt is the return that an investor can expect to earn if the debt is held until maturity.

Formula: $\text{Yield on Debt} = \frac{\text{Annual Interest Payment}}{\text{Current Market Price}}$

$\text{Annual Interest Payment}$ : The yearly interest payment received from the debt
$\text{Current Market Price}$ : The current market price of the debt

Example: $\text{Yield on Debt} = \frac{10,000}{200,000}$

Annual Interest Payment: 10,000
Current Market Price: 200,000