Finance Formulas / July 6, 2018 / Alyvia French
Loans can be confusing. Slick lenders quote different numbers that mean different things. They might include certain costs that you're likely to pay, or they might omit those costs in advertisements and brochures.
What does the debt service coverage ratio mean? A DSCR greater than 1.0 means there is sufficient cash flow to cover debt service. A DSCR below 1.0 indicates there is not enough cash flow to cover debt service. However, just because a DSCR of 1.0 is sufficient to cover debt service does not mean it’s all that’s required.
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