DSCR Calculation

by a searcher from National Technical University of Athens

2 months ago

Hello.

I'm building a financial projection for serial acquisitions.
Wondering what is the proper formula for DSCR since there seems to be no formal one.
Generally speaking, when a lending institution asks for, let's say, 1,25x DSCR, what defitinion does it usually use?
I'm torn between using 

EBITDA 

or

EBITDA - Income Tax - CapEx

Anything else I should consider?

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8 comments

searcher

Appreciate the added color, Mike

3 weeks ago | like reply | 0 likes

intermediary from The University of Chicago - Booth School of Business

DSCR (1.25, 1.5) based solely on EBITDA does not guarantee you can service the debt.
EBITDA - Taxes - CapX is better. Calculating taxes is a circular problem.

2 months ago | like reply | 1 like

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