Debt Service Coverage Ratio (DSCR) Calculator

Instructions for Using the Debt Service Coverage Ratio (DSCR) Calculator

Follow these steps to calculate your Debt Service Coverage Ratio and assess your business’s financial health:

Step 1: Gather Your Financial Data

• Net Operating Income (NOI):
  Identify your total revenue after deducting operating expenses. For example, NOI may include earnings before taxes but exclude debt payments.

• Total Debt Service:
  Sum up all debt obligations, including principal and interest payments, for the period you’re analyzing.

Step 2: Enter Values in the Calculator

1. Locate the input field labeled “Net Operating Income (NOI):”

   • Enter your NOI as a numeric value (e.g., 50,000).
   • Avoid including currency symbols or commas.

2. Locate the input field labeled “Total Debt Service:”

   • Input the total debt payment amount (e.g., 40,000).
   • Ensure the value is greater than zero for accurate results.

Step 3: Click Calculate

• Press the “Calculate DSCR” button.
• The calculator will instantly compute your DSCR using the formula:

DSCR=Net Operating Income (NOI)Total Debt ServiceDSCR = \frac{\text{Net Operating Income (NOI)}}{\text{Total Debt Service}}DSCR=Total Debt ServiceNet Operating Income (NOI)​

Step 4: Review Your DSCR

• Displayed Result:
  The result will show your DSCR value.

  Example:
  If your NOI is $50,000 and your debt service is $40,000, your DSCR is 1.25.

• Color Indicators:

  • Green: Healthy DSCR (e.g., above 1.25).
  • Orange: Marginal DSCR (1.0 – 1.25).
  • Red: Insufficient DSCR (below 1.0).

Step 5: Interpret the Results

• A DSCR above 1.25 indicates strong financial stability.
• A DSCR between 1.0 and 1.25 suggests limited capacity for unexpected costs.
• A DSCR below 1.0 means your income does not cover your debt payments, requiring immediate attention.

Step 6: Take Action

• If your DSCR is low, consider strategies like increasing revenue, reducing expenses, or refinancing debt.
• Use the results to guide loan applications, optimize cash flow, or plan future debt management strategies.

With these instructions, you can effectively use the DSCR calculator to gain insights into your financial standing and make informed business decisions.