Once you know how to calculate DSCR, you can get a better sense of your finances and make strategic operating decisions that benefit your business. The DSCR is a measure of a business’s ability to pay off loans - the ratio of a business’s available cash flow to its debt obligations, including principal and interest payments on a loan. To calculate DSCR, divide net operating income by debt service, including principal and interest.įor small businesses to holistically understand their finances, it’s important to understand how to calculate debt-service coverage ratio (DSCR), which can help a business decide how much it can afford to pay in debt obligations.DSCR can help businesses understand whether they have enough net operating income to pay back loans. ![]() ![]() Debt-service coverage ratio measures a business’s cash flow versus its debt obligations.
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