What is debt service ratio? Debt Service Coverage Ratio

Debt Service Coverage Ratio, also known as "Debt Service Coverage Ratio", or DSCR in English, is a financial indicator that measures a company's ability to use its income to repay all debt. When calculating DSCR, different calculation formulas are used according to different industries. For example, the real estate industry needs to use operating income divided by total debt to measure, while for companies in general industries, EBITDA can be calculated by dividing total debt (Debt). The significance of the debt service reserve ratio is to measure the ratio of the company's income to debt: when the debt service reserve ratio is greater than 1, it means that the company's income is sufficient to cope with the total debt and there is a surplus; when the debt service reserve ratio is less than 1, it usually means that the company's income is not enough to cope with the total debt. However, when evaluating a company's operating capabilities, the debt service ratio is not the only reference value. In order to obtain more accurate and comprehensive evaluation results, more financial values are needed for a comprehensive evaluation.