Investor Glossary-debt service coverageInvestor Glossary-debt service coverageInvestor Glossary-debt service coverageInvestor Glossary-debt service coverageInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Debt Service Coverage

The HTML to link to this page
 

The debt service coverage ratio calculates the amount of cash available to meet debt obligations. The debt service coverage ratio is used in both corporate and real estate finance. Excluding tax considerations, in corporate finance,
Debt service coverage ratio = [Net Income + Depreciation/Amortization + Interest Expense]/[Interest Expense + Principal Payments].
For real estate loans,
Debt service coverage ratio = Projected Net Operating Income (ie, rents less operating expenses)/Debt Service (principal plus interest).
When making income property loans, a debt service coverage ratio of 1 is the minimum required to ensure the property generates sufficient income to cover the debt. Indeed, most lenders will require some cushion and demand a debt service coverage ratio of 1.25 or better.



Rate this debt service coverage definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: labor relations, balance sheet, VIX, implied volatility, current ratio, reverse mortgage, risk management, minority interest, option premium, inflation, EBITDA, average price per share, ex-dividend date, annual return, 144a, wholly-owned subsidiary, irrevocable trust, Key Rate Duration, APR, stock split, debt service coverage, deferred tax, 1031 exchange, LIBOR, real GDP, Zero Cost Collar, liquidity ratio, 1035 exchange, FTSE, phantom income, covered put, in escrow, stock market close, per diem, margin rate, open position, quality assurance, dividends payable, deferred revenue, required rate of return, FICO score, retained earnings, diluted share, 401a, class C shares, ex-dividend, command economy, limit order, cancelled check


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use