Debt-service coverage ratio

(redirected from Debt Coverage Ratios)

Debt-service coverage ratio

Earnings before interest and income taxes, divided by interest expense plus the quantity of principal repayments divided by one minus the tax rate.

Debt-Service Coverage Ratio

1. In investment real estate, the ratio of annual net operating income on a piece of investment property to its annual debt service. Banks use the DSCR to help determine whether to make or refinance loans for investment property. A DSCR equal to or greater than 1 indicates that the debtor is able to service the debt on the income from the investment property. In personal finance, banks usually require a DSCR of at least 1 to make such a loan, while they generally expect a ratio of 1.2 for commercial projects.

2. In government finance, the ratio of annual export earnings to its annual debt service on external debt.
References in periodicals archive ?
adjusted by data available (with correlative effect on debt coverage ratios and
Maalot further believes that management will ensure debt coverage ratios commensurate with the current rating, by implementing its investment plan.
It identified properties as "underperforming" when they had occupancy levels below 90 percent and/or debt coverage ratios below 1 percent.
Going forward, the Group is expected to increase its debt load to facilitate investment in working capital and business acquisitions; its gearing and FFO debt coverage ratios are projected to average a respective 0.
The closest company in terms of business scale and debt coverage ratios is TNK-BP, yet its credit quality looks even slightly worse due to occasional conflicts between key shareholders.
Thirdly, a company must pay holders of debt an interest rate, even if the company is loss-making--and failure to pay interest or to achieve debt coverage ratios may put the company into default and force a liquidation.
In addition, lender debt coverage ratios have readjusted to a minimum of 1.
The loan-to-value ratio and mortgage constant are used in both the band of investment and the Ellwood formula for developing overall rates, and debt coverage ratios are easily surveyed or acquired from mortgage research sources such as the American Council of Life Insurance Companies' Investment Bulletin.
Fitch expects Telecel to remain with strong short-term debt coverage ratios.
The Company uses the term EBITDA because it is a widely accepted financial indicator utilized to analyze and compare companies on the basis of operating performance and is used to calculate certain debt coverage ratios included in several of the Company's debt agreements.
Underwriting criteria include loan-to-value ratios up to 85 percent and minimum debt coverage ratios as low as 1.
The survey found debt coverage ratios averaged between 1.