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


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | 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