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The debt service coverage ratio (DSCR), also known as "debt coverage ratio" (DCR), is a financial metric used to assess an entity's ability to generate enough cash to cover its debt service obligations, such as interest, principal, and lease payments. The DSCR is calculated by dividing the operating income by the total amount of debt service due.
Faleel Jamaldeen states that debt-based contracts are often used to finance not-so-minor purchases (homes, cars, etc.) for bank customers. [55] These instruments include mark-up , leasing (ijara), cash advances for the purchase of agricultural produce (salam), and cash advances for the manufacture of assets (istisna'). [56]
An example of this would be a customer wishing to borrow $1000 in cash having their bank buy $1,100 worth of a commodity such as iron from a supplier, buying the iron from the bank on credit with 12 months to pay the $1100 back, immediately selling the metal back to the bank for $1000 cash to be paid on the spot.
Debt-service coverage ratio (DSCR) looks at a company's cash flow versus its debts. The ratio is used when gauging a business's ability to pay off current loans and take on future financing.
The primary form of riba is the interest or other increase on a loan of cash, known as riba an-nasiya. Most Islamic jurists acknowledge another type of riba , [ 10 ] the simultaneous exchange of unequal quantities or qualities of some commodity, known riba al-fadl .
Current liabilities in accounting refer to the liabilities of a business that are expected to be settled in cash within one fiscal year or the firm's operating cycle, whichever is longer. [1] These liabilities are typically settled using current assets or by incurring new current liabilities.
Buying a car for $10,000 and selling it for $12,000 is allowed by Islam. Making a purchase on a deferred payment basis is also allowed by Islam. However, not mentioned here is the fact that the same car that is being sold for $12,000 on a deferred payment basis is being sold for $10,000 on a cash basis. So basically Adam has two options:
The free market principle is an Islamic principle as cited per the primary islamic source in the Quran. [citation needed] Islam considers commodities with intrinsic value as currency.