How to Calculate DSCR for Your Business
DSCR stands for Debt Service Coverage Ratio. At its core, DSCR is a financial metric used to assess your business’s ability to meet its debt obligations. In other words, it measures whether your company generates enough income to cover its debt payments. The formula involves comparing your business’s operating income to its debt service (comprising both interest and principal payments). The resulting ratio provides a clear picture of your financial health and your ability to manage debt responsibly.