Cash Available for Debt Service
Cash Available for Debt Service
Ratio of
cash assets to debt service (interest plus nearby principal). Used in evaluating the risk of a project or
firm. The higher the ratio the less likely the firm or project will fail to meet its debt
obligations.
Cash Available for Debt Service
A ratio of a company's
cash on hand to its
debt service. A ratio of less than 1 indicates that the company is unable to service its debt while a ratio of 1 means that it can service its debt, but that doing so will result in no remaining cash on hand. Thus,
shareholders and potential
lenders prefer to have the cash available for debt service to be as high as possible.
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