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debt coverage ratio
(redirected from Debt service coverage ratio)

   Also found in: Acronyms, Wikipedia 0.02 sec.
debt coverage ratio (DCR)

The ratio of net operating income compared to annual debt service, which includes principal and interest payments. The ratio is used by lenders to evaluate loans on income-producing property.A ratio of 1.2 or better will usually support the extension of credit.

Example:

Annual revenues $100,000

– Annual operating expenses 50,000

 Net operating income 50,000

Annual debt service on proposed loan 11,000

$50,000 ÷ $11,000 = DCR of 4.54



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The Fitch stressed debt service coverage ratio (DSCR) for the loan is calculated based on a Fitch adjusted net cash flow (NCF) and a stressed debt service based on the current loan balance and a hypothetical mortgage constant.
The hotel continues to perform as indicated by a year-to-date (YTD) June 2006 debt service coverage ratio (DSCR) of 1.
The Fitch stressed debt service coverage ratio (DSCR) for the loan is calculated based on a Fitch adjusted net cash flow (NCF) and a stressed debt service based on the current loan balance and a hypothetical mortgage constant.
 
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