The calculation of the DCSR

The calculation of the DSCR (Debt Service Coverage Ratio) it is an indicator of the ability of a company to meet its commitments to the financial system through the cash generated in a given period. The Operating Cash Flow (numerator of the indicator) represents the capacity of the firm to generate cash through its own characteristic management; the portion of debt to be repaid including interest over a given period of time is in the denominator. If the ratio is greater than 1 (1,1 is currently the most commonly used threshold) then the firm would be able to meet its commitments.

But how is it calculated? Is it calculated on annual data, monthly data, management data and / or forecast data? Is it possible to calculate the DSCR using the information present in the Central Credit Register data? When the company is growing rapidly, what values ​​does the DSCR assume?

Gianluca Imperiale - Founder and Administrator of Business Plan Excel



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