This debt service coverage ratio calculator checks whether your operating profit comfortably covers your loan repayments, the key test a lender applies before approving credit.
DSCR = operating profit divided by loan repayments. A ratio of 1 means profit exactly covers repayments, with no margin. Lenders typically want 1.25 or higher, so profit comfortably exceeds what you owe.
Before a lender approves a loan, they ask a simple question: does your profit comfortably cover the repayments? The debt service coverage ratio answers it. A ratio of 1.25 means your profit is 25 percent more than your repayments, a margin lenders like.
Below 1, your profit does not cover the repayments and the loan is risky for both sides. Knowing your ratio before you apply tells you whether to borrow less, lift profit first, or proceed.
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