When to use this calculator
Compare entered cash available with scheduled principal and interest payments. Definitions of available cash and required debt service vary across contracts.
Explore the profitability & liquidity calculators for other questions in this topic. For a related calculation, use the Debt to Equity Calculator: Compare an entered measure of business debt with positive equity.
PUTTING IT INTO PRACTICE
Debt Service Coverage: a worked example
The values below are an illustrative example, not a recommendation. Replace them with measurements or assumptions that match your question.
| Input | Example value |
|---|---|
| Cash available for debt service | 120,000 |
| Scheduled period debt service | 100,000 |
| Result | 1.2 × |
- Check the input labels and enter the example values above.
- Apply the relationship: DSCR = available cash/debt service.
- The result is 1.2 ×, rounded for display.
How to interpret your result
Definitions of available cash and required debt service vary across contracts.
Gross, operating and net profit include different sets of costs. Balance-sheet ratios describe a date rather than a cash-flow forecast. Compare like accounting periods and definitions before drawing conclusions.
Frequently asked questions
Can a healthy current ratio guarantee cash is available?
No. Some current assets may be slow to collect or sell, so payment timing and asset quality also matter.
When is the debt service coverage calculator useful?
Compare entered cash available with scheduled principal and interest payments. Definitions of available cash and required debt service vary across contracts.
How do I use the debt service coverage calculator?
Enter cash available for debt service, scheduled period debt service. The result updates automatically. Use the units shown beside each input; the example values illustrate the method.
Which formula does this calculator use?
DSCR = available cash/debt service.
What should I check before using the result?
Definitions of available cash and required debt service vary across contracts.
How are results rounded?
Scalar numbers display up to six decimal places, with scientific notation for very large or small values. Text, fraction, date and schedule outputs use the format described on the tool. Intermediate calculations use JavaScript floating-point arithmetic. Keep sensible precision for your measurements.
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