Debt Coverage Ratio Estimator
This calculator helps assess a borrower's ability to repay debt using the Debt Coverage Ratio (DCR). It compares net operating income to total debt obligations, offering a clear view of financial sustainability—especially for lenders, investors, or property owners.
Calculate Debt Coverage Ratio from NOI and Debt Payments
Debt Coverage Ratio (DCR) Formula
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$$\text{DCR} = \frac{\text{Net Operating Income}}{\text{Total Debt Service}}$$
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Where:
- Net Operating Income (NOI) – income generated by operations before debt payments
- Total Debt Service – total required payments for principal and interest on all loans
A $$DCR > 1$$ indicates sufficient income to cover debts; a $$DCR < 1$$ means a shortfall. [/wp_code] The Debt Coverage Ratio is a key metric in real estate, banking, and corporate finance. It indicates how comfortably a borrower can meet debt obligations from operational income. A DCR of 1.2, for example, means the income is 120% of the debt payments. This tool is especially useful for evaluating commercial loans, rental properties, or corporate debt structures.