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Debt Service Coverage Ratio
The debt service coverage ratio (DSCR), also known as the debt coverage ratio (DCR), is a financial ratio that measures an entity's ability to generate sufficient cash to cover its debt obligations, including interest, principal, and lease payments. It is calculated by dividing the net operating income (NOI) by the total debt service. A higher DSCR indicates stronger cash flow relative to debt commitments, while a ratio below 1 suggests insufficient funds to meet payments. Lenders, such as banks, often set a minimum DSCR in loan covenants, where falling below this threshold may constitute a default. In corporate finance, the DSCR reflects cash flow available for annual debt payments, including sinking fund contributions. In personal finance, it aids loan officers in evaluating an individual’s debt repayment capacity. In commercial real estate, it determines whether a property’s cash flow can sustain its debt, with typical minimums around 1.25. Applications The DSCR serve ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Financial Ratio
A financial ratio or accounting ratio states the relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used by managers within a firm, by current and potential shareholders (owners) of a firm, and by a firm's creditors. Financial analysts use financial ratios to compare the strengths and weaknesses in various companies. If shares in a company are publicly listed, the market price of the shares is used in certain financial ratios. Ratios can be expressed as a decimal value, such as 0.10, or given as an equivalent percentage value, such as 10%. Some ratios are usually quoted as percentages, especially ratios that are usually or always less than 1, such as earnings yield, while others are usually quoted as decimal numbers, especially ratios that are usually mor ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Interest Obligations
In finance and economics, interest is payment from a debtor or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct from a fee which the borrower may pay to the lender or some third party. It is also distinct from dividend which is paid by a company to its shareholders (owners) from its profit or reserve, but not at a particular rate decided beforehand, rather on a pro rata basis as a share in the reward gained by risk taking entrepreneurs when the revenue earned exceeds the total costs. For example, a customer would usually pay interest to borrow from a bank, so they pay the bank an amount which is more than the amount they borrowed; or a customer may earn interest on their savings, and so they may withdraw more than they originally deposited. In the case of savings, the customer is the lender, and the bank plays the role of the borrower. Interest di ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Financial Ratios
A financial ratio or accounting ratio states the relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used by managers within a firm, by current and potential shareholders (owners) of a firm, and by a firm's creditors. Financial analysts use financial ratios to compare the strengths and weaknesses in various companies. If shares in a company are publicly listed, the market price of the shares is used in certain financial ratios. Ratios can be expressed as a decimal value, such as 0.10, or given as an equivalent percentage value, such as 10%. Some ratios are usually quoted as percentages, especially ratios that are usually or always less than 1, such as earnings yield, while others are usually quoted as decimal numbers, especially ratios that are usually mor ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Cash-flow-to-debt Ratio
The cash flow to debt ratio is a financial ratio that measures a company's ability to cover its total debt with its operating cash flow. It is calculated by dividing the cash flow from operations by the total debt outstanding, providing insight into how many years it would take to repay all debt assuming constant cash flow. This ratio is widely used by financial analysts and creditors to evaluate a company's liquidity and financial health, particularly its capacity to manage debt without relying on external financing. Unlike the debt service coverage ratio (DSCR), which focuses on annual debt payments, the cash flow to debt ratio considers the entire debt balance, making it a broader indicator of leverage. A higher ratio suggests stronger debt repayment ability, while a lower ratio may signal financial strain. Calculation The cash flow to debt ratio is expressed as: : \text = \frac Where: * Cash Flow from Operations is the cash generated from core business activities, typica ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Project Finance
Project finance is the long-term financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of its sponsors. Usually, a project financing structure involves a number of equity investors, known as 'sponsors', and a 'syndicate' of banks or other lending institutions that provide loans to the operation. They are most commonly non-recourse loans, which are secured by the project assets and paid entirely from project cash flow, rather than from the general assets or creditworthiness of the project sponsors, a decision in part supported by financial modeling; see Project finance model. The financing is typically secured by all of the project assets, including the revenue-producing contracts. Project lenders are given a lien on all of these assets and are able to assume control of a project if the project company has difficulties complying with the loan terms. Generally, a special purpose entity is created for ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Operating Leverage
Operating leverage is a measure of how revenue growth translates into growth in operating income. It is a measure of leverage, and of how risky, or volatile, a company's operating income is. Definition There are various measures of operating leverage, which can be interpreted analogously to financial leverage. Costs One analogy is "fixed costs + variable costs = total costs . . . is similar to . . . debt + equity = assets". This analogy is partly motivated because, for a given amount of debt, debt servicing is a fixed cost. This leads to two measures of operating leverage: One measure is fixed costs to total costs: :\frac=\frac Compare to debt to value, which is :\frac=\frac Another measure is fixed costs to variable costs: :\frac Compare to debt to equity ratio: :\frac Both of these measures depend on sales: if the unit variable cost is constant, then as sales increase, operating leverage (as measured by fixed costs to total costs or variable costs) decreases. Contribu ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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LLCR
Loan Life Coverage Ratio (LLCR) is a ratio commonly used in project finance. The ratio is defined as: Net Present Value of Cashflow Available for Debt Service ("CFADS") / Outstanding Debt in the period. Financial modelling of LLCR is now a standard metric calculated in a project finance model and has been standardized to a large extentCrawley, Nick. Financial modelling of LLCR', September 2008 but always needs to be aligned with local practice of the financiers as described in the transaction term sheet. NPV(CFADS) is measured only up until the maturity of the debt tranche. The ratio is one of the aspects used for estimates of the credit quality of a project from a lender's perspective. Related ratios are: Project Life Coverage Ratio (PLCR) and Reserve Life Coverage Ratio (RLCR). The ratio usually is in a range from 1.25 for highly geared infrastructure investment to 2.5 or higher in an investments with more insecure income, such as oil and gas transactions. See also *Debt servi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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CAPEX
Capital expenditure or capital expense (abbreviated capex, CAPEX, or CapEx) is the money an organization or corporate entity spends to buy, maintain, or improve its fixed assets, such as buildings, vehicles, equipment, or land. It is considered a capital expenditure when the asset is newly purchased or when money is used towards extending the useful life of an existing asset, such as repairing the roof. Capital expenditures contrast with operating expenses (opex), which are ongoing expenses that are inherent to the operation of the asset. Opex includes items like electricity or cleaning. The difference between opex and capex may not be immediately obvious for some expenses; for instance, repaving the parking lot may be thought of inherent to the operation of a shopping mall. Similarly, the costs of software for a business (either software development or software as a service licensing) might fall into either opex or capex (that is, is it merely business as usual, or is it someth ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Expenditure
An expense is an item requiring an outflow of money, or any form of fortune in general, to another person or group as payment for an item, service, or other category of costs. For a tenant, rent is an expense. For students or parents, tuition is an expense. Buying food, clothing, furniture, or an automobile is often referred to as an expense. An expense is a cost that is "paid" or " remitted", usually in exchange for something of value. Something that seems to cost a great deal is "expensive". Something that seems to cost little is "inexpensive". "Expenses of the table" are expenses for dining, refreshments, a feast, etc. In accounting, ''expense'' is any specific outflow of cash or other valuable assets from a person or company to another person or company. This outflow is generally one side of a trade for products or services that have equal or better current or future value to the buyer than to the seller. Technically, an expense is an event in which a proprietary stake is di ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Principal Obligations
Principal may refer to: Title or rank * Principal (academia), the chief executive of a university ** Principal (education), the head of a school * Principal (civil service) or principal officer, the senior management level in the UK Civil Service * Principal dancer, the top rank in ballet * Principal (music), the top rank in an orchestra Law * Principal (commercial law), the person who authorizes an agent ** Principal (architecture), licensed professional(s) with ownership of the firm * Principal (criminal law), the primary actor in a criminal offense * Principal (Catholic Church), an honorific used in the See of Lisbon Places * Principal, Cape Verde, a village * Principal, Ecuador, a parish Media * ''The Principal'' (TV series), a 2015 Australian drama series * ''The Principal'', a 1987 action film * Principal (music), the lead musician in a section of an orchestra * Principal photography, the first phase of movie production * "The Principal", a song on the album ''K-1 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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EBIDA
A company's earnings before interest, taxes, depreciation, and amortization (commonly abbreviated EBITDA, pronounced ) is a measure of a company's profitability of the operating business only, thus before any effects of indebtedness, state-mandated payments, and costs required to maintain its asset base. It is derived by subtracting from revenues all costs of the operating business (e.g. wages, costs of raw materials, services ...) but not decline in asset value, cost of borrowing and obligations to governments. Although lease have been capitalised in the balance sheet (and depreciated in the profit and loss statement) since IFRS 16, its expenses are often still adjusted back into EBITDA given they are deemed operational in nature. Though often shown on an income statement, it is not considered part of the Generally Accepted Accounting Principles (GAAP) by the SEC, hence the SEC requires that companies registering securities with it (and when filing its periodic reports) reconc ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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Debt
Debt is an obligation that requires one party, the debtor, to pay money Loan, borrowed or otherwise withheld from another party, the creditor. Debt may be owed by a sovereign state or country, local government, company, or an individual. Commercial debt is generally subject to contractual terms regarding the amount and timing of repayments of #Principal, principal and interest. Loans, bond (finance), bonds, notes, and Mortgage loan, mortgages are all types of debt. In financial accounting, debt is a type of financial transaction, as distinct from equity (finance), equity. The term can also be used metaphorically to cover morality, moral obligations and other interactions not based on a monetary value. For example, in Western cultures, a person who has been helped by a second person is sometimes said to owe a "debt of gratitude" to the second person. Etymology The English term "debt" was first used in the late 13th century and comes by way of Old French from the Latin verb ' ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |