Debt-service coverage ratio

(redirected from Debt-Service 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 ?
In evaluating each scenario, the Bank examines how changes in interest rates and unemployment affect consumer credit and the distribution of debt-service ratios (for more details, see Dey, Djoudad, and Terajima 2008).
There does not seem to be a strong case for restrictive regulation of consumer credit products, such as tight caps on interest rates or limits on borrowers' debt-service ratios.
Though limited, the data indicate that the rise in household debt prior to the recent recession did not affect the distribution of the debt-service ratio across Canadian households over the period from 1999 to 2007--indeed, Faruqui (2008) finds that both the mean and the distribution of the debt-service ratio of Canadian households varied little over the period.
Increasing reliance on BLT projects, which are viewed as off-balance-sheet debt financings, as well as insufficient tariffs, will erode CFE's debt-service ratios over the next five years.
The terms of trade are expected to be inversely related to changes in the debt-service ratios.
Terms of borrowings and growth rate of GDP do not appear to have any significant impact on the variations in the debt-service ratios.
debt-GNP and debt-service ratio, reflect the inter-play of several economic as well as non-economic factors.
Leverage and debt-service ratios have improved since 2007, when GPB300m of debt was raised to finance a capital return.
Debt and debt-service ratios for Colombia are comparable to other low investment- grade emerging countries.
Debt Markets: Average loan-to-value ratios have declined and debt-service ratios have increased since the third quarter of 2002, reversing a troubling trend.
This final step in setting up the credit bureau will bring transparency, making sure that borrowers stay within their means, living within proper debt-service ratios.