Debt service coverage ratio: Comparing Operating Income with Debt Service
Debt service coverage compares operating income with payments due over the same period. A result of 1 means the entered income exactly matches the entered debt service.
Use the Debt service coverage ratio Calculator to enter your own figures and compare the result with the worked example below.
Debt service coverage ratio formula
DSCR = Net operating income ÷ Debt service
Worked example
| Item | Example value |
|---|---|
| Net operating income | 120000 USD |
| Debt service for same period | 80000 USD |
| Debt service coverage ratio | 1.5 |
These are illustrative inputs, not current prices, rates or recommended targets. Where a currency is shown, keep all comparable money amounts in the same currency; conversion examples identify the two sides separately.
How to interpret the result
Include principal and interest according to the agreement being assessed. Definitions of eligible income and required coverage vary by lender.
Related calculations
Method and further reading
The example follows the FinMathly calculator method. For broader background, see SEC: Understanding financial statements. The background resource may use jurisdiction-specific terms; it does not replace the assumptions of this calculator.
Featured photograph: Pexels.