Covenant Headroom Calculator
Enter your financial figures and covenant thresholds to see headroom, the EBITDA decline to each threshold, and which covenant is tightest. All inputs are your modelling assumptions.
Display formatting only. No currency conversion. Enter all figures in the same currency.
Section A — Financial position
Enter your figures. All fields are optional except where a ratio needs them.
Used for DSCR / indicative CFADS only.
Some covenant definitions prevent net debt falling below zero. Use only if it reflects the definition you are modelling.
Covenant EBITDA
Use Reported EBITDA as-is, or build an adjusted / covenant EBITDA bridge.
Covenant thresholds
Enable only the tests you are modelling. Thresholds are your assumptions — not market standards.
Tightest covenant
The active covenant that reaches its entered threshold first, based on EBITDA decline.
Enter your financial figures and enable covenant tests to see the binding covenant.
Calculation transparency
Full precision is used internally; values are rounded only for display.
What is covenant headroom?
Covenant headroom is the amount of capacity remaining before a financial covenant reaches its agreed threshold. For a leverage covenant, headroom may reflect how much EBITDA could decline or debt could increase before the maximum leverage ratio is reached. For a coverage covenant, it indicates the remaining capacity before the relevant minimum coverage ratio is reached.
Measuring headroom helps show the financial cushion between a borrower’s current position and its entered covenant limits.
Interpreting covenant headroom
Greater headroom generally indicates more capacity to absorb adverse changes in EBITDA, debt or financing costs before an entered covenant threshold is reached. Limited headroom means a relatively small deterioration may cause a covenant to become restrictive.
Where several covenant tests apply, the tightest or binding covenant is the one that reaches its threshold first under the assumptions entered. CovenantScope compares the enabled tests so the relative headroom across leverage and coverage measures can be assessed together.
Actual covenant calculations depend on the definitions, adjustments, exclusions and testing requirements contained in the relevant finance agreement.