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Talk:Debt service coverage ratio

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This is an old revision of this page, as edited by Rjrneves (talk | contribs) at 17:06, 13 November 2009 (→Concept problem: new section). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.
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Merge

I've merged this page with the Debt coverage ratio page. Finnancier 12:11, 12 September 2007 (UTC)[reply]

Cleanup problems

I've attached a cleanup tag - this article needs some major help. Among the issues:

  • Unencyclopedic tone. It rambles and is often written in the second person.
  • Use of examples sounds like tutorial rather than explanation. In general examples should be very limited here.
  • Very US-centric, and does not explain its assumptions and methods
  • Written before the 2008-2009 financial crisis, so many of the claims about uses and standards are obsolete, not just unreferenced
  • Seems to be incorrect in a number of ways, confuses cash flow with income. Debt service coverage ratio is a measure by the bank of whether (by their standards - not by accounting or financial standards) the property will generate enough cash flow to pay the loan. Income considers things like depreciation, whereas the bank does not care about that. However, the bank adds various fudge factors such as maintenance and repair, vacancy factors, etc., that are standard numbers and usually not based on actual performance. A good article would explain the bank methodology here, and how it varies from market to market.
  • Obviously, it needs sources.

- Wikidemon (talk) 22:47, 28 January 2009 (UTC)[reply]

Concept problem

Please, anyone:

DSCR = ( Net_income + [addback] Depreciation ) / Total_principal_payment

or

DSCR = (Net_Income + Depreciation/Amortization + Interest_Expense) / (Interest_Expense + Total_principal_payment) [1]


Right? One cannot add Interest payments doubled (it's already accounted in NI).


Rjrneves (talk) 17:06, 13 November 2009 (UTC)[reply]

  1. ^ http://www.investorglossary.com/debt-service-coverage.htm
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