Debt Service Coverage Ratio (DSCR) Calculator Template
Debt service coverage ratio is the number a credit committee reaches for first: cash available for debt service divided by the payments due on that debt. This calculator works it out before and after the loan you are asking for, and then runs the calculation backwards to show how much the business could service in total.
The ratio is simple; the top half is where the arguments happen. Cash available for debt service is operating profit with depreciation added back, because depreciation is an accounting entry rather than a payment. One-off adjustments belong there too — but only genuinely non-recurring ones. Owner costs the business will keep paying are not add-backs, and a lender who finds one stops believing the rest of the file.
Most covenants sit at 1.25, meaning the bank wants twenty-five per cent more cash than the payments require. That margin sounds generous until you test it. Operating costs do not fall when revenue does: rent, salaries and software are the last things to move in a bad year. A business comfortably above the covenant on paper can breach it after a single-digit fall in gross profit, which is why the sheet shows that threshold explicitly rather than leaving it to be discovered.
What the ratio cannot see is timing. DSCR is an annual average, and it treats a business that earns its whole year in four months exactly like one that earns evenly across twelve. If your revenue is seasonal, a passing ratio and an empty account in February are entirely compatible — check the monthly cash flow alongside it. Finmap keeps that view current, so the question of whether a payment lands safely is answered by the calendar rather than by an average.
