How to calculate Debt Service Coverage Ratio?
Calculation of DSCR is very simple. To calculate this ratio, following items from the financial statement are required: Profit after tax (PAT) Non cash expenses (e.g. Depreciation, Miscellaneous expenses written off etc.) Interest for the current year Installment for the current year Lease Rental for the current year Sometimes, these figures are readily available but at times, they are to be determined using the financial statements of the company / firm. Formula for DSCR is stated as follows: DSCR = PAT + Interest + Lease rental + Non cash expenses Installment (Interest + Principal repayment) + Lease Rental ยท Profit after tax (PAT): PAT is generally available readily on the face of the Profit and loss account. It is the balance of the profit and loss account which is transferred to the reserve and surplus fund of the business. Sometimes, in absence of the profit and loss statement, we can also find it from the balance sheet by subtracting the current year P/L account from the previous
