Debt Service Coverage Ratio Calculator
DSCR from net operating income or EBITDA against principal and interest, the way a lender computes it, with the adjustments credit agreements usually require.
Work it out
Opens on a worked example. Change any line and every figure follows. Cost of goods sold and operating expenses go in before depreciation and amortisation.
Runs entirely in your browser. Nothing you enter is sent to us or stored.
Debt service coverage
1.45x
- Fixed charge coverage
- 1.08x
Against your covenant
The fixed charge ratio fails it. Your agreement's own definition governs.
How it is worked out
| Ratio | Formula |
|---|---|
| Debt service coverage | EBITDA / (Principal + Interest) |
| Fixed charge coverage | (EBITDA - Unfunded capex - Cash taxes - Distributions) / (Principal + Interest + Lease payments) |
Cost of goods sold and operating expenses are entered before depreciation and amortisation, which are their own lines.
Related reading
Where the figures behind a ratio come from, and what it takes to trust them.
- Glossary
General Ledger
The general ledger is the master record of an entity's accounts, holding every posted debit and credit by account and period. Subledgers feed it, the chart of accounts defines its structure, and the trial balance is its summary.
- Glossary
Balance Sheet Reconciliation
Balance sheet reconciliation is the practice of reconciling every balance sheet account, not just cash, on a documented schedule with a named owner and risk tier per account. It is the close deliverable auditors test first, and account reconciliation is the technique it applies, account by account.
- Glossary
Variance Analysis
Variance analysis compares an actual result against a benchmark, usually budget, forecast, or prior period, and explains the difference with specific, evidenced causes. It is distinct from flux analysis, which reviews period-over-period fluctuations during the close.
- Free tool
Financial Ratio Calculators
Every ratio from one set of statements.
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13-Week Cash Flow Forecast
What a ratio is a snapshot of, week by week.
The formula
DSCR = Net operating income / Total debt service
Fixed charge coverage = (EBITDA - unfunded capex - cash taxes - distributions) / (Principal + Interest + Leases)
What the number means
Whether the business produces enough to pay its debt. Below 1.0 it does not, and the difference comes from cash reserves, a line of credit or an equity holder.
This is a covenant number before it is an analytical one, which makes it different from everything else in the pack. A credit agreement will specify the numerator, the denominator, the measurement period, whether it is trailing twelve months or annualised quarterly, and which add-backs are permitted and up to what cap. Two lenders will compute materially different DSCRs for the same company and both will be correct under their own documents.
The tool therefore shows the common construction and a configurable one, and says plainly on the page that the agreement governs. A borrower who computes a comfortable DSCR their own way and reports it is going to have a difficult conversation.
The adjustments that usually bite: unfunded capital expenditure, because maintenance capex is not optional and a lender knows it; cash taxes; and owner distributions, which in a closely held business are frequently the reason a comfortable-looking DSCR fails the actual test.
A worked example
A trucking company at 1.45 DSCR on the simple calculation and 1.08 on its agreement's fixed charge definition, against a 1.20 covenant, and a quarter to do something about it.
Ratios are downstream
of the close.
Connected accounts, reconciled at zero tolerance, with statements for any period and any entity. Your team approves what the agents propose, and the numbers the ratios come from are ones you can sign.