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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.
The formula for determining a company’s DSCR is: ... What is a good debt-service coverage ratio? Most lenders want to see a debt-service coverage ratio of at least 1.25.
When the interest coverage ratio is smaller than one, the company is not generating enough cash from its operations EBIT to meet its interest obligations. The company would then have to either use cash on hand to make up the difference or borrow funds. Typically, it is a warning sign when interest coverage falls below 2.5x.
Interest coverage ratio, or ICR, is used to evaluate a company’s ability to pay the interest it owes on its debts. There is no generally agreed upon standard for what makes a healthy ICR across ...
Coverage ratio may refer to Building coverage ratio, related to floor area ratio; Debt service coverage ratio; Interest coverage ratio This page was last edited on 6 ...
Related ratios are: Project Life Coverage Ratio (PLCR) and Reserve Life Coverage Ratio (RLCR). The ratio usually is in a range from 1.25 for highly geared infrastructure investment to 2.5 or higher in an investments with more insecure income, such as oil and gas transactions.
By contrast, the (true) coverage probability is the actual probability that the interval contains the parameter. If all assumptions used in deriving a confidence interval are met, the nominal coverage probability will equal the coverage probability (termed "true" or "actual" coverage probability for emphasis).
In addition to changes in capital requirements, Basel III also contains two entirely new liquidity requirements: the net stable funding ratio (NSFR) and the liquidity coverage ratio (LCR). On October 31, 2014, the Basel Committee on Banking Supervision issued its final Net Stable Funding Ratio (it was initially proposed in 2010 and re-proposed ...