1. Finance
  2. Shareholder & Creditor Relations

Debt Service Coverage Ratio


Measures a company's ability to service its current debts with its current cash flow. A higher ratio means the company is more capable of meeting its debt obligations, reducing the risk for creditors.


Operating Income / Total Debt Service


If a company has an operating income of $500,000 and debt obligations of $250,000, the Debt Service Coverage Ratio would be 2:1.