![]() 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 personal finance, DSCR refers to a ratio used by bank loan officers in determining debt servicing ability. 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. It's an important metric for measuring an entity's financial health and its ability to meet its debt obligations. Banks and lenders often use a minimum DSCR ratio as a loan condition, and breaching this covenant can sometimes be considered an act of default. A higher DSCR indicates that an entity has a greater ability to service their debts, making it easier for them to obtain loans. The DSCR is widely used as a benchmark to measure the ability of an individual or corporation to meet their debt obligations. The DSCR is calculated by dividing the operating income available for debt service by the total amount of debt service due. These obligations include interest, principal, and lease payments. The debt service coverage ratio ( DSCR), known as "debt coverage ratio" (DCR), is a financial metric used to assess an entity's ability to generate enough cash to cover its debt service obligations. ( July 2022) ( Learn how and when to remove this template message) See Wikipedia's guide to writing better articles for suggestions. ![]() This article's tone or style may not reflect the encyclopedic tone used on Wikipedia.
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