Finance CalculatorsBusiness FinanceFree Tool
Debt Service Coverage Ratio
Calculate your Debt Service Coverage Ratio (DSCR) - EBIT divided by interest plus principal repayment - to gauge whether operating profit covers your total debt obligations.
How to Use Debt Service Coverage Ratio
- 1Enter your EBIT
- 2Enter your annual interest payments
- 3Enter your annual principal repayment
- 4Click Calculate to see your DSCR and bankability guidance
Frequently Asked Questions
DSCR = EBIT divided by (Interest plus Principal Repayment). Unlike the Interest Coverage Ratio, this includes the principal portion of your debt repayment in the denominator, not just interest.
This calculator flags 1.25 or above as generally bankable, 1.0 or above as barely covering debt service, and below 1.0 as unable to service debt from operations - many lenders require DSCR in the 1.25-1.50 range or higher before approving a loan.
Interest Coverage Ratio only divides EBIT by interest expense. DSCR is stricter - it adds the principal repayment amount to the denominator too, since a business needs to cover both to stay current on a loan.
Use your own financial statements, or compute it first with the EBIT Calculator on this site (Revenue minus COGS minus Operating Expenses) if you don't already have the figure.
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