Debt service cover ratio

The weighted average debt service cover ratio (DSCR) is an important element in the analysis of commercial property backed loans. It indi-... 

Loan structure is more than just leverage (an area previously discussed). It includes such elements as the loan amortisation schedule and any performance triggers such as minimum debt service cover ratios. These should also be considered in any credit analysis. 

Debt Service Coverage Ratio (DSCR) = Net Operating Income / Debt Payments and so indicates a borrower s ability to repay a loan with a DSCR of less than 1.0, meaning that there is insufficient cash flow generated by the property to cover required debt payments. 

Gives IRR/NPV, cashflow and cover ratios (ie the ratio of net project revenue to debt service costs) on project investment. 

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