Finance Formulas / July 7, 2018 / Avalynn Orr
For example, suppose Net Operating Income (NOI) is $120,000 per year and total debt service is $100,000 per year. In this case the debt service coverage ratio (DSCR) would simply be $120,000 $100,000, which equals 1.20. It’s also common to see an "x" after the ratio. In this example it could be shown as "1.20x", which indicates that NOI covers debt service 1.2 times.
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.
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