Definition
This query is : Resolved
06 December 2010
What is the basic meaning of Debt Service Coverage Ratio? What Should be the DSCR?
06 December 2010
DEBT SERVICE COVERAGE RATIO : This ratio is one of the most important one which indicates the ability of an enterprise to meet its liabilities by way of payment of installments of Term Loans and Interest thereon from out of the cash accruals and forms the basis for fixation of the repayment schedule in respect of the Term Loans raised for a project.
The Ideal DSCR Ratio is considered to be 2.
The Ideal DSCR Ratio is considered to be 2.
06 December 2010
Formula:
PAT + Depr. + Annual Interest on Long Term Loans & Liabilities
---------------------------------------------------------------------------------
Annual interest on Long Term Loans & Liabilities + Annual Installments payable on Long Term Loans & Liabilities
*** ( Where PAT is Profit after Tax and Depr. is Depreciation)
PAT + Depr. + Annual Interest on Long Term Loans & Liabilities
---------------------------------------------------------------------------------
Annual interest on Long Term Loans & Liabilities + Annual Installments payable on Long Term Loans & Liabilities
*** ( Where PAT is Profit after Tax and Depr. is Depreciation)
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