DSCR Calculator
Calculate the Debt Service Coverage Ratio. DSCR definitions vary between credit agreements — choose direct CFADS (preferred) or build an indicative CFADS. Results are labelled accordingly.
Inputs
Direct CFADS uses your agreement's definition. The result is labelled "DSCR".
Methodology
- Direct CFADS (preferred)
- DSCR = CFADS ÷ (cash interest + scheduled principal). Uses your agreement's definition of CFADS directly.
- Indicative CFADS
- CFADS ≈ covenant EBITDA − cash taxes − maintenance capex − increase in NWC. Illustrative only — labelled "Indicative DSCR".
- Why definitions vary
- Some agreements define CFADS starting from EBITDA, others from operating cash flow; treatment of taxes, capex and working capital differs. Refer to your finance documents.
Worked example (direct)
- CFADS: £600,000
- Debt service = £400,000 interest + £100,000 principal = £500,000
- DSCR = 1.20x
Interpretation & limitations
A DSCR above 1.0x means cash flow covers scheduled debt service; a ratio below 1.0x means it does not. The indicative CFADS builder is a simplification — actual covenant CFADS may include or exclude items differently. Always check your credit agreement.
Related tools
Your financial data stays on your device. Calculations run entirely in your browser. Nothing is uploaded or saved.
Understanding DSCR
The Debt Service Coverage Ratio (DSCR) compares cash flow available for debt service with the interest and scheduled principal payments that must be serviced during the relevant period. It therefore focuses on a borrower's ability to meet debt service from available cash flow rather than looking only at earnings or the amount of debt outstanding.
A higher DSCR generally indicates greater cash flow coverage of scheduled debt service. Where a finance agreement contains a minimum DSCR covenant, the calculated ratio can be compared with that threshold to assess the amount of covenant headroom available.
What affects DSCR?
DSCR can decline when cash flow available for debt service falls or when required debt service increases. Changes in operating performance, cash taxes, capital expenditure, working capital, interest costs or scheduled principal repayments may therefore affect the ratio, depending on the applicable definition.
CFADS definitions can vary materially between finance agreements. The relevant agreement determines which cash flows, adjustments and debt service obligations are included, so the contractual definition should always be used where available.