Can operating income service my debt?. The DSCR Calculator takes net operating income (ebitda for the year), total debt service (principal + interest for the year) and returns debt service coverage ratio plus income left after debt service, reading. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Financial ratios are only useful in comparison: against last year, against a competitor, or against the benchmark for your industry. Take the figures from the same set of accounts, note whether they are yearly or monthly, and read each ratio alongside the others in its family. Use the worked example below to check the maths against your own figures.
How the DSCR Calculator works
Lenders use DSCR to decide whether a business or property can carry a loan. 1.25 or higher is the usual minimum; the spare income shows how much cushion exists.
Worked example
With the example values (net operating income (ebitda for the year) of $240,000, total debt service (principal + interest for the year) of $150,000), the debt service coverage ratio is 1.60x; income left after debt service $90,000.00, reading Comfortable for most lenders. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is debt service coverage ratio calculated?
DSCR = net operating income ÷ annual debt service.
Which figures do I need?
Net operating income (ebitda for the year), total debt service (principal + interest for the year). Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
What is a good value for this ratio?
Benchmarks differ by industry, size and business model, so compare with companies like yours and with your own history. A ratio moving in the wrong direction for several periods matters more than any single number.
