Calculation of DSCR
Whether interest on working capital is allowed to add back for calculation of debt service coverage ratio. Please guide
Working capital or cash on hand are typically not included in debt service coverage ratio calculations. DSCR is used solely to determine what percentage of current cash flow will cover existing debt service.
For more information on what DSCR is and how to use it, be sure to check out our ultimate guide here: https://fitsmallbusiness.com/debt-service-coverage-ratio/
In a business context, most lenders typically also consider cash on hand when making loan decisions.
Hope this helps,