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debt coverage ratio |
Also found in: Acronyms, Wikipedia | 0.06 sec. |
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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 How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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A debt coverage ratio of one indicates coverage of one hundred percent, which is indicative of a AAA-rated issuer. The debt coverage ratio can be viewed as a payback period; that is, it estimates how many years, at the current level of cash from operations, it will take to retire all debt. 0 times (x) total collateral to secured debt coverage ratio. |
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