How Do Businesses Measure Debt Service Coverage?

Divide net operating income by total debt payments to check your ability to cover debt obligations.
 

Debt Service Coverage

Calculators

Measure your company's available cash flow to determine if you have enough income to pay debts. The formula requires net operating income and the total debt servicing for your company. Net operating income is a company's revenue stream minus certain operating expenses, not including taxes or interest payments. 

Contact a TowneBank banker to learn more about business loans and lines of credit available for your business. 

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Debt Service Coverage Calculator

While several factors are considered in commercial loan underwriting, debt service coverage is primary among them and indicates a borrower's capacity to service a requested loan. This tool calculates debt service and illustrates how debt service coverage ratios are impacted by changing income and capital assumptions.

Information and interactive calculators are made available to you only as self-help tools for your independent use and are not intended to provide investment or tax advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

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The information provided is not intended to be legal, tax, or financial advice or recommendations for any specific individual, business, or circumstance. TowneBank cannot guarantee that it is accurate, up to date, or appropriate for your situation. Financial calculators are provided for illustrative purposes only. You are encouraged to consult with a qualified attorney or financial advisor to understand how the law applies to your particular circumstances or for financial information specific to your personal or business situation.

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