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How do you calculate debt service coverage ratio of a firm?
Debt Service Coverage Ratio = Interest payable on debt/Net Profit
What Is A Debt Coverage Ratio?
It’s a ratio among Net Operating Income and the debt service. It's used to determine profitability after paying debt service.
What would increase a company's current ratio?
How to Improve Current Asset RatioInvestors, managers, business owners and other stakeholders use financial ratios to measure the performance of companies. The current asset ratio, or working capital ratio, is one commonly used tool that measures the liquidity and financial position of a company. It is calculated by adding up all of the company's current assets and dividing them by the total amount of the company's current liabilities. This ratio is used to determine how well a company is able to pay its obligationsUnderstand what short-term means. Short-term assets refer to assets that are very liquid. Assets are things a company owns that have value. If an asset is short-term, it means the company can easily turn the asset to cash in one year or less. Short-term assets include cash, supplies and accounts receivable. Accounts receivable is an account that tracks amounts owed to the company. Short-term liabilities refer to amounts the company owes to other businesses or individuals that are due within one year or less.Calculate the current asset ratio. Before you can try improving this ratio, you must know what your company's current asset ratio is. Add up all current assets and divide this amount by the total of all current liabilities. A ratio of two or higher is considered good. Companies with ratios of two or higher are often more likely to have fewer issues paying their debts.Pay off some of the current liabilities. For example, if your company has $50,000 in current assets, with $30,000 in cash, and $35,000 in current liabilities, the current ratio is 1.4. To improve this, consider using some of the cash to pay off the debts. If you use $20,000 of the cash to pay off debts, the ratio changes to $30,000 in current assets divided by $15,000 in current liabilities, resulting in a current ratio of 2.Pay off as much debt as possible. If you want to improve the current ratio by using all your cash to pay off debt in the example, the current asset ratio would improve to 4. This is calculated by using the full $30,000 in cash to pay off the debt, leaving only $5,000 in debt. This leaves $20,000 in current assets divided by $5,000 in debt, causing the current ratio to significantly improve.Take out long-term debt. Another way to improve the current ratio is to take a long-term loan for all of the current debt. By doing this, the current liabilities are completed eliminated which results in a terrific current asset ratio. The debt; however, is still there, but will be paid over a longer time span.Read more: How to Improve Current Asset Ratio | eHow.com http://www.ehow.com/how_8396521_improve-current-asset-ratio.html#ixzz1J2uAwejw
How do you calculate excel sheet in Debt-Service Coverage Ratio - DSCR?
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What is meant by the interest coverage ratio?
The interest coverage ratio is the calculation that determines a company's ability to repay debt payments. It is this calculation that determines whether or not companies are able to obtain loans.
How do you calculate debt service coverage ratio of a firm?
Debt Service Coverage Ratio = Interest payable on debt/Net Profit
What advantage does fixed charge coverage ratio offer using times interest earned?
This is a very open ended question that implies one does not understand the purpose of the ratio and I see no advantage to any ratio over another. A ratio simply measures the variables inputted. The Fixed Charge Coverage Ratio ("FCCR") reflects the amount of cash (or EBITDA) left after paying for unfinanced capital expenditures, dividends (or distributions) and cash paid taxes then divided by the "fix charges" or the sum of the past period's cash interest and required payments on long term debt or also know as the current portion long term debt ("CPLTD"). In my opinion to answer the question; the advantage of this ratio over the use of an Uniform Cash Flow Analysis ("UCA") Debt Service Coverage ("DSC") is simply the starting point of EBITDA vs. net income. EBITDA is more commonly used in larger credit facilities as a component of ratios or covenants measurement. Also a very similar ratio is Free Cash Flow ("FCF") divided by Total Debt Service ("TDS") or FCF/TDS.
What is meant by DSCR.?
Debt Service Coverage Ratio
How to calculate Historical debt service coverage ratio?
Net operating Income/Total debt service Total debt servide-cash reuired to pay out interest as well as principal on a debt Net operating Income/Total debt service Total debt servide-cash reuired to pay out interest as well as principal on a debt
which of the of the following would increase a company current ratio?
Increasing Cash Reserves: If a company holds more cash or cash equivalents, it will increase its current assets, which would raise the current ratio. Reducing Short-Term Debt: Paying off or reducing short-term debt, such as accounts payable or short-term loans, will decrease current liabilities, resulting in a higher current ratio. Increasing Accounts Receivable Collections: If a company collects outstanding accounts receivable more promptly, it will increase its cash or current assets, which can raise the current ratio. Decreasing Inventory Levels: Reducing excess inventory can decrease current assets, but it can also reduce current liabilities if the company has short-term loans secured by inventory. This can potentially increase the current ratio. Increasing Current Assets: By increasing any of the current assets, such as accounts receivable, prepaid expenses, or marketable securities, without a corresponding increase in current liabilities, the current ratio will go up. Restructuring or Refinancing Short-Term Debt: If a company restructures or refinances its short-term debt to extend maturity dates, it can reduce the current portion of long-term debt, which would decrease current liabilities and raise the current ratio.
What are the Effect of operating lease payment on cash flow statement?
Higher cash flows from financing Lower cash flows from operations Lower liabilities Lower assets Higher current ratio Lower debt to equity ratio Higher asset turnover ratio
What is the difference between interest coverage ratio and debt coverage ratio?
Interest coverage ratio, is net operating income + accrual/ interest That is whether the company can cater for the interest portion.
What Is A Debt Coverage Ratio?
It’s a ratio among Net Operating Income and the debt service. It's used to determine profitability after paying debt service.
A firm has a long-term debt-equity ratio of .4 Shareholders equity 1 million. Current assets 200000 and current ratio is 2.0. The only current liabilities are notes payable. Total debt ratio is?
not provided, as the information given does not include the total debt amount.
What is a cash flow leverage ratio?
Senior Debt / EBITDA
What would increase a company's current ratio?
How to Improve Current Asset RatioInvestors, managers, business owners and other stakeholders use financial ratios to measure the performance of companies. The current asset ratio, or working capital ratio, is one commonly used tool that measures the liquidity and financial position of a company. It is calculated by adding up all of the company's current assets and dividing them by the total amount of the company's current liabilities. This ratio is used to determine how well a company is able to pay its obligationsUnderstand what short-term means. Short-term assets refer to assets that are very liquid. Assets are things a company owns that have value. If an asset is short-term, it means the company can easily turn the asset to cash in one year or less. Short-term assets include cash, supplies and accounts receivable. Accounts receivable is an account that tracks amounts owed to the company. Short-term liabilities refer to amounts the company owes to other businesses or individuals that are due within one year or less.Calculate the current asset ratio. Before you can try improving this ratio, you must know what your company's current asset ratio is. Add up all current assets and divide this amount by the total of all current liabilities. A ratio of two or higher is considered good. Companies with ratios of two or higher are often more likely to have fewer issues paying their debts.Pay off some of the current liabilities. For example, if your company has $50,000 in current assets, with $30,000 in cash, and $35,000 in current liabilities, the current ratio is 1.4. To improve this, consider using some of the cash to pay off the debts. If you use $20,000 of the cash to pay off debts, the ratio changes to $30,000 in current assets divided by $15,000 in current liabilities, resulting in a current ratio of 2.Pay off as much debt as possible. If you want to improve the current ratio by using all your cash to pay off debt in the example, the current asset ratio would improve to 4. This is calculated by using the full $30,000 in cash to pay off the debt, leaving only $5,000 in debt. This leaves $20,000 in current assets divided by $5,000 in debt, causing the current ratio to significantly improve.Take out long-term debt. Another way to improve the current ratio is to take a long-term loan for all of the current debt. By doing this, the current liabilities are completed eliminated which results in a terrific current asset ratio. The debt; however, is still there, but will be paid over a longer time span.Read more: How to Improve Current Asset Ratio | eHow.com http://www.ehow.com/how_8396521_improve-current-asset-ratio.html#ixzz1J2uAwejw
What are the guidelines for investing in real estate?
Note down the Rate of capitalizationConsider the Debt Coverage Ratio(DCR)Count on the Loan To Value (LTV) ratioCheck the Cash flow and return on investment
