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2 years ago

Given the following information, calculate the debt coverage ratio of this commercial loan:

Business

1 answer:

pishuonlain [190]2 years ago

3 0

Answer:

1.50

Explanation:

The debt coverage ratio shows the extent to which the property is generating income in a bid to pay its debt service charge, it is computed using the below DSCR formula

DSCR= net operating income (NOI)/Debt service

net operating income (NOI)=$150,000

Debt service=interest expense or finance charge in the year=$100,000

DSCR=$150,000/$100,000

DSCR=1.50

The property in question is generating income that is 1.5 times its debt servce yearly

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