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Debt service coverage calculator

Change any input. Coverage is measured on the cash the business keeps, not on EBITDA, and the minimum turns into a loan size.

Starts on the worked question’s invented case: Calder Supply’s FY2025 and a $2,500k term loan. Amounts in $000 a year; equal annual payments.

Cash available for debt service
$800k
New loan’s annual payment
$524k
Total debt service
$1,124k

DSCR 0.71x against a 1.25x minimum: short

EBITDA coverage would read 1.60x. Cash short of the minimum: $606k.

Cash available against debt service
Cash available$800k
Debt service, existing + new$1,124k
Cash needed at the minimum$1,406k
Largest new loan at the minimum, same rate and term
$191k
Room for new annual debt service
$40k

How debt service coverage works

  1. Cash available for debt service (CFADS). EBITDA − cash taxes − maintenance capex − increase in working capital. It is the cash the business actually keeps to pay lenders.
  2. The new loan’s payment. A level annual payment repays principal and interest in equal amounts: loan × rate ÷ (1 − (1 + rate)−years).
  3. DSCR. CFADS ÷ total debt service, existing plus new. At or above the policy minimum passes; below it is short.
  4. Largest loan. CFADS ÷ minimum is the most debt service the cash supports. Less existing debt service, that is the room for a new payment, and the room × (1 − (1 + rate)−years) ÷ rate is the loan it repays.

EBITDA coverage overstates repayment capacity because EBITDA is before taxes, the capex that keeps the business running and the cash tied up in receivables and inventory. A growing business can show rising EBITDA while its cash falls.

On Calder Supply’s case, EBITDA of $1,800k covers $1,124k of debt service 1.60x, but CFADS is $800k: 0.71x. Even if working capital falls back to $100k, CFADS of $1,100k covers it 0.98x, and the cash supports a new loan of about $1,335k, not $2,500k.

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Last reviewed Nov 9, 2026