Cash flow & operations
Business Debt Service Coverage Calculator
Compare cash available for debt service with annual principal and interest, then test a target coverage ratio.
How to use this calculator
- Enter annual cash available before debt payments using a consistent financial definition.
- Enter all annual principal and interest payments covered by that cash flow.
- Set a planning ratio and inspect payment capacity. Different lenders may define both the numerator and target differently.
How the calculation works
Debt service coverage ratio divides annual cash available by annual debt service. At zero debt service, the ratio is undefined rather than a numeric score. Dividing cash available by the target ratio estimates debt payments that fit the selected scenario. The tool shows no positive capacity when cash available is negative. It is a planning comparison, not a loan qualification test.
Worked example
These results use the editable example values shown in the calculator. They illustrate the method and do not predict an offer or outcome.
- Debt service coverage ratio
- 1.20×
- Debt service at your target ratio
- $144,000.00
- Additional capacity / shortfall
- -$6,000.00
- Cash remaining after debt service
- $30,000.00
Questions about the results
Is the example 1.25 target required by my lender?
Not necessarily. It is editable. Confirm the lender definition of cash flow, debt service and coverage requirements.
Should I enter EBITDA or operating cash flow?
Use the measure appropriate to your comparison and keep it consistent. Lenders may make adjustments that this simplified calculator does not determine.