Calculating your debt service coverage ratio is straightforward once you know the DSCR formula and what each input means. This guide explains the method in plain language, walks through a manual calculation, and gives worked examples you can follow — then you can do it instantly with the DSCR Calculator.
What is DSCR?
The DSCR calculation tells you your debt service coverage ratio from a few simple inputs. The figure you are solving for here is the debt service coverage ratio.
The DSCR formula
The core formula is:
Debt service coverage ratio = Net operating income (annual) ÷ Annual debt serviceHere is what each input means:
- Net operating income (annual) — a money amount. Example: ₹6,00,000.
- Annual debt service — a money amount. Example: ₹5,00,000.
How to calculate it step by step
- Write down the net operating income (annual) (for example, ₹6,00,000).
- Write down the annual debt service (for example, ₹5,00,000).
- Apply the formula above to get your debt service coverage ratio.
- Double-check the result with the DSCR Calculator.
Worked examples
Example 1
| Input / Output | Value |
|---|---|
| Net operating income (annual) | ₹6,00,000 |
| Annual debt service | ₹5,00,000 |
| Debt service coverage ratio | 1.20 |
With net operating income (annual) of ₹6,00,000 and annual debt service of ₹5,00,000, the debt service coverage ratio works out to 1.20.
Example 2
With net operating income (annual) of ₹12,00,000 and annual debt service of ₹5,00,000, the debt service coverage ratio works out to 2.40.
| Result | Value |
|---|---|
| Debt service coverage ratio | 2.40 |
Example 3
With net operating income (annual) of ₹3,00,000 and annual debt service of ₹5,00,000, the debt service coverage ratio works out to 0.60.
| Result | Value |
|---|---|
| Debt service coverage ratio | 0.60 |
Tips for an accurate result
- Keep your units consistent — mixing, say, months with years or grams with kilograms is the most common source of error.
- Round only at the very end. Rounding inputs early can shift the final answer noticeably.
- Re-run the numbers whenever an input changes, rather than estimating from an old result.
- Annual rates must be converted to the period you are calculating for (for example, divide an annual rate by 12 for a monthly figure).
Prefer not to do the maths by hand? — the DSCR Calculator does it instantly, for free, with the formula and a worked example built in.
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