Debt Service coverage ratio

aaash.ag
Posts: 7
Joined: Thu Oct 31, 2013 9:58 am

Debt Service coverage ratio

Postby aaash.ag » Thu Jan 02, 2014 3:41 am

Need clarity to calculate Debt service coverage ratio. Please explain Net Operating income and Total Debt Service with example.

pradeeppdy
Finance Junkie
Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

Debt Service coverage ratio

Postby pradeeppdy » Thu Jan 02, 2014 10:28 am

NOI comes from day to day business activities and the second part Total debt service is regular interest payment to long term debt.
So, By dividing NOI by total debt service we will know how far times the company is sufficient to repay their interest on debts by using income from operations.

pradeeppdy
Finance Junkie
Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

Debt Service coverage ratio

Postby pradeeppdy » Thu Apr 03, 2014 9:20 am

Debt service coverage ratio is ability to cover debt by the organisation . Net operating income represents company's income net of taxes and interests . If the company is able to service the debt with the NOI it called in a good financial health.


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