Debt Service Coverage Ratio
/ˈdɛt ˈsɜrvɪs ˈkʌvərɪdʒ ˈreɪʃioʊ/
Definitions
- (n.) A financial metric used to measure an entity's ability to cover its debt obligations with its operating income.
Lenders use the debt service coverage ratio to assess the risk of loan default.
Forms
- debt service coverage ratio
- debt service coverage ratios
Related terms
See also
Commentary
Primarily used in loan agreements and credit analysis; a ratio below 1 indicates insufficient earnings to cover debt payments.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.