Debt Service Coverage Ratio (DSCR) also known as "debt
coverage ratio," (DCR) is supposed to determine whether a company in
question generates enough cash from operating activities to make all necessary
interest, principal and lease payments. It is calculated as the ratio of cash available for debt servicing (Gross
Cash Flow) to the total sum of interest, principal and lease payments.
Which is not completely accurate as it does not take into
account the necessity to make Gross Investment into working capital and
long-term assets. Therefore, these adjustments need to be made to make DSCR
more realistic.
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