DSCR Query Pls Reply

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Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2010 I need your help dear experts,

Pls help me.

thanks in advance

CA Sanat Pyne

CA Sanat Pyne (Expert)
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17 August 2010 DSCR (Debt Service Coverage Ratio) is a ratio which is often looked into by Banks when they evaluate a credit proposal. Each bank has a benchmark DSCR below which they get a little reluctant to grant a loan to a company. It shows the debt paying capacity of the company. In the future the bank should get its loan back and as such the company should not default on its obligations. It is calculated by dividing the net operating income by the total debt of the company. hope the info helps answers your query.

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CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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17 August 2010 The debt service coverage ratio (DSCR), is the ratio of cash available for debt servicing to interest, principal and lease payments. It is a popular benchmark used in the measurement of an entity's (person or corporation) ability to produce enough cash to cover its debt (including lease) payments. The higher this ratio is, the easier it is to obtain a loan. The phrase is also used in commercial banking and may be expressed as a minimum ratio that is acceptable to a lender; it may be a loan condition or covenant. Breaching a DSCR covenant can, in some circumstances, be an act of default.

USES OF DSCR

In corporate finance, DSCR refers to the amount of cash flow available to meet annual interest and principal payments on debt, including sinking fund payments.[1]

In personal finance, DSCR refers to a ratio used by bank loan officers in determining debt servicing ability.

In commercial real estate finance, DSCR is the primary measure to determine if a property will be able to sustain its debt based on cash flow. In the late 1990s and early 2000s banks typically required a DSCR of at least 1.2, but more aggressive banks would accept lower ratios, a risky practice that contributed to the Financial crisis of 2007–2010. A DSCR over 1 means that (in theory, as calculated to bank standards and assumptions) the entity generates sufficient cash flow to pay its debt obligations. A DSCR below 1.0 indicates that there is not enough cash flow to cover loan payments

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Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2010 pls sirs solve my query for one year after i will do as per your help.

https://www.caclubindia.com/experts/help-me-through-this-query-thanks-462055.asp