Finance Formulas / July 13, 2018 / Kenley Hopper
Economic profit is the profitability measurement that calculates the amount that revenues received from selling a product exceeds opportunity costs incurred from using resources to make and sell these products. In other words, it’s the excess money a company earned from one course of action over another had they chosen differently.
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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